AMAT
Applied Materials Inc
Price:  
156.00 
USD
Volume:  
4,823,398.00
United States | Semiconductors & Semiconductor Equipment
Valuation
Overview
Financials
Forecast
Compare
Historical Price
SolvencyDividends
Transactions
People

AMAT WACC - Weighted Average Cost of Capital

The WACC of Applied Materials Inc (AMAT) is 11.5%.

The Cost of Equity of Applied Materials Inc (AMAT) is 11.90%.
The Cost of Debt of Applied Materials Inc (AMAT) is 4.25%.

Range Selected
Cost of equity 10.20% - 13.60% 11.90%
Tax rate 12.60% - 13.10% 12.85%
Cost of debt 4.00% - 4.50% 4.25%
WACC 9.9% - 13.2% 11.5%
WACC

AMAT WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 1.37 1.56
Additional risk adjustments 0.0% 0.5%
Cost of equity 10.20% 13.60%
Tax rate 12.60% 13.10%
Debt/Equity ratio 0.05 0.05
Cost of debt 4.00% 4.50%
After-tax WACC 9.9% 13.2%
Selected WACC 11.5%

AMAT's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for AMAT:

cost_of_equity (11.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.37) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.