Neither Applied Materials nor AMD is automatically the better AI stock to buy in 2026. Applied Materials sells the equipment chipmakers use to manufacture semiconductors, so its AI opportunity depends on customers investing in production capacity and new processes. AMD sells processors and accelerators, making its opportunity more directly dependent on product adoption, competition, and its ability to supply customers. The latest reported quarters show strong growth at both companies, but the available valuation figures are secondary and not a synchronized market snapshot. The choice depends on which business model and risks fit your investment thesis—and on what each stock costs when you make that decision.
What is the difference between Applied Materials and AMD?
They occupy different points in the semiconductor supply chain. Applied Materials (AMAT) sells manufacturing equipment and materials-engineering solutions to semiconductor producers. Its AI exposure is indirect: demand for its tools can rise when customers expand or update capacity for advanced logic, memory, or packaging.
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AMD (AMD) designs and sells processors and accelerators for computing markets. Its AI exposure is more direct: revenue depends on customers adopting its products and platforms, AMD executing against competitors, and the company securing enough manufacturing and supply capacity to meet demand.
That distinction matters because AI-related capital spending does not translate into revenue in the same way for both companies. Equipment orders reflect chipmakers’ investment plans; AMD’s sales reflect demand for its own products. Each can benefit from AI growth, but neither is a simple proxy for the other.
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How did each company perform in its latest reported quarter?
The figures below come from each company’s 2026 earnings release. The reporting periods differ, and the earnings measures are labeled because GAAP and non-GAAP results are not interchangeable.
| Company and reporting period | Revenue | Reported earnings and other indicators | AI-related context |
|---|---|---|---|
| Applied Materials, fiscal Q3 2026, quarter ended July 26, 2026 | $9.115 billion, up 25% year over year | GAAP net income: $2.538 billion. GAAP diluted EPS: $3.17. Non-GAAP diluted EPS: $3.50. Non-GAAP operating margin: 34.0%. Non-GAAP free cash flow: $2.330 billion. | Management said AI demand was driving demand for its materials-engineering solutions and that it was raising its Semiconductor Systems revenue expectations for calendar 2026. |
| AMD, Q2 2026 | $11.536 billion, up 50% year over year | GAAP gross margin: 54%. GAAP operating income: $1.990 billion. GAAP net income: $2.297 billion. GAAP diluted EPS: $1.38. Non-GAAP diluted EPS: $1.66. | Data Center revenue more than doubled year over year and represented 58% of company revenue in the quarter. |
These headline growth rates should not be read as a direct ranking. The companies reported different fiscal quarters, and AMD’s year-over-year comparison was affected by its Q2 2025 results, which included $800 million in inventory and related charges tied to U.S. export controls on Instinct MI308 data-center GPU products. That prior-year charge is important context; it means the 50% increase should not be treated as a purely organic comparison.
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AMD CEO Lisa Su described the quarter as one of record revenue and profitability and said Data Center revenue more than doubled year over year. That is management’s description of company performance, not evidence that the growth rate or market-share gains will continue. Applied Materials CEO Gary Dickerson likewise attributed demand for the company’s solutions to the global adoption of AI. Executive commentary provides context for management’s outlook, not an independent forecast of future results.
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Where does Applied Materials’ AI opportunity come from?
Equipment spending, not sales of AI chips
Applied Materials’ potential AI-linked growth depends on semiconductor manufacturers buying equipment and investing in production. In its May 14, 2026 Q2 call script, management identified leading-edge foundry-logic, DRAM, and advanced packaging as areas relevant to AI performance, power efficiency, and cost. The company forecast that those areas would account for more than 80% of year-over-year growth in total wafer fab equipment spending in calendar 2026. That was a management forecast made in May, not a reported market result.
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The same May remarks forecast growth of more than 30% in Applied Materials’ semiconductor equipment business in calendar 2026. The company’s August Q3 release later described increased expectations for Semiconductor Systems revenue in broad terms; its later outlook should not be treated as though it repeated the exact May forecast.
Capacity is part of the timing risk
Equipment demand depends not only on customers wanting more advanced production, but also on their ability to build or repurpose cleanroom capacity. Applied Materials management discussed cleanroom space as a pacing factor and later reported increased delivery requests. Those comments help explain why demand forecasts and recognized revenue may not move in lockstep; they remain management’s account of customer conditions.
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What could drive AMD’s AI-related growth—and what could interrupt it?
Product adoption and execution
AMD’s Q2 2026 results show that Data Center had become a major contributor to the business: it was 58% of revenue, and the company said the segment more than doubled year over year. Su also cited accelerating EPYC demand, scaling Instinct deployments, and the start of Helios ramping as sources of momentum entering the second half. Those are company-reported results and management commentary; they do not establish that customer adoption, deployments, or revenue growth will persist.
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In its filing for the quarter ended June 27, 2026, AMD identified risks including competitive markets, semiconductor cyclicality, export restrictions, reliance on third-party manufacturers and suppliers, and the possibility that a small number of customers could account for a substantial portion of revenue and receivables. These are company risk disclosures, not predictions that any specific disruption will occur. They do show why strong product demand alone cannot settle the investment question: AMD also has to compete, obtain supply, and navigate policy and customer concentration risks.
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Which stock looks cheaper?
A comparison published by The Motley Fool on October 1, 2026, citing Financial Modeling Prep, reported forward price-to-earnings ratios of 23.4x for Applied Materials and 39.5x for AMD, and price-to-sales ratios of 11.9x and 24.2x, respectively. The comparison warned that valuation metrics can differ by provider. The figures were not independently verified as a synchronized current price-and-earnings snapshot for October 7, 2026, so they should be treated as a dated secondary comparison—not as a definitive statement of either stock’s current valuation.
Forward P/E also depends on the earnings estimates and share price used; price-to-sales does not show how much profit a company earns on each dollar of sales. To make a relative valuation judgment, use prices from the same date and comparable forward-earnings estimates from the same basis. Keep GAAP and non-GAAP earnings distinct, and check how the provider defines its forward period. Without that common snapshot and a stated time horizon, the available multiples cannot prove that one is the better buy.
Which thesis might fit your view of AI growth?
Applied Materials may fit an equipment-investment thesis
- You expect chipmakers to keep investing in advanced manufacturing, memory, and packaging capacity.
- You prefer exposure to the equipment cycle rather than relying on one chip designer’s product adoption.
- You are willing to account for the timing of customer spending, cleanroom availability, and semiconductor cycles.
AMD may fit a chip-product adoption thesis
- You expect AMD to win more demand for its processors and data-center accelerators.
- You are comfortable with direct exposure to product competition, manufacturing reliance, export restrictions, and customer concentration.
- You think the current price adequately reflects both the company’s growth prospects and the execution risks it has disclosed.
These are different ways to express a view about the semiconductor industry, not substitutes for checking valuation, risk tolerance, or portfolio fit. The operating results establish recent growth; they do not establish future returns or a universal winner.
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