Applied Materials AMAT · USD

Industry Segment Operations Our two reportable segments are: Semiconductor Systems and Applied Global Services (AGS). The Display operating segment financial results were included in the Corporate and Other category balances below, as management no longer considers the Display operating segment a significant operating segment for separate reporting purposes. Segment information is presented based upon our management organization structure as of October 26, 2025 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to our reportable segments. The Semiconductor Systems segment includes semiconductor capital equipment to enable materials engineering steps including etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation.The AGS segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, 200 millimeter and other equipment and factory automation software for semiconductor and other products.Our President and Chief Executive Officer is our chief operating decision-maker (CODM). We derive the segment results directly from our internal management reporting system. The accounting policies we use to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, net revenue and operating income. Our CODM regularly reviews segment operating income to evaluate the performance of, and to assign resources to, each of the reportable segments. Actual results are compared to budgeted amounts as part of the CODM’s assessment of each segment’s performance and to make decisions about allocating resources to each segment. Our CODM does not evaluate operating segments using total asset information.The Corporate and Other category includes revenues, costs of products and operating expenses from other operating segments that do not meet the requirements for a reportable segment. Corporate and Other also includes certain corporate function operating expenses that are not allocated to our reportable segments and are managed separately at the corporate level.

Guarantees, Commitments and Contingencies GuaranteesIn the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either us or our subsidiaries. As of October 26, 2025, the maximum potential amount of future payments that we could be required to make under these guarantee agreements was approximately $350 million. We have not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. We do not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements.We also have agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of October 26, 2025, we have provided parent guarantees to banks for approximately $293 million to cover these arrangements.Legal MattersFrom time to time, we receive notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by us in connection with claims made against them. In addition, from time to time, we receive notification from third parties claiming that we may be or are infringing or misusing their intellectual property or other rights. We also are subject to various legal proceedings, government investigations or inquiries, and claims, both asserted and unasserted, that arise in the ordinary course of business. These matters are subject to uncertainties, and we cannot predict the outcome of these matters, or governmental inquiries or proceedings that may occur. Although the outcome of the above-described matters, claims and proceedings cannot be predicted with certainty, we do not believe at this time that any of the above-described matters will have a material effect on our consolidated financial condition or results of operations. Since 2022, we have received multiple subpoenas from government authorities requesting information relating to certain China customer shipments and export controls compliance, including from the U.S. Department of Justice, the U.S. Commerce Department Bureau of Industry and Security, and the U.S. Securities and Exchange Commission. We also have received subpoenas from the U.S.

Borrowing Facilities and DebtRevolving Credit FacilitiesIn September 2025, we entered into a $2.0 billion 364-day committed revolving credit agreement (364-Day Credit Agreement) with a group of banks. The 364-Day Credit Agreement includes a provision under which we may request an increase in the amount of the facility of up to $1.0 billion for a total commitment of no more than $3.0 billion, subject to the receipt of commitments from one or more lenders for any such increase and other customary conditions. The 364-Day Credit Agreement is scheduled to expire in September 2026, provided, however, if any loans are outstanding on the maturity date, we may convert all or part of such loans to term loans that will mature in September 2027, subject to payment of a fee by us and other customary conditions. The 364-Day Credit Agreement provides for unsecured borrowings that bear interest for each advance at one of two rates selected by us, plus an applicable margin, which varies according to our public debt credit ratings.No amounts were outstanding under the 364-Day Credit Agreement as of October 26, 2025.In February 2025, we entered into a $2.0 billion committed revolving credit agreement (Five-Year Credit Agreement) with a group of banks. The Five-Year Credit Agreement includes a provision under which we may request an increase in the amount of the facility of up to $500 million for a total commitment of no more than $2.5 billion, subject to the receipt of commitments from one or more lenders for any such increase and other customary conditions. The Five-Year Credit Agreement is scheduled to expire in February 2030, unless extended as permitted under the terms of the agreement. The Five-Year Credit Agreement provides for borrowings that bear interest for each advance at one of two rates selected by us, plus an applicable margin, which varies according to our public debt credit ratings. The Five-Year Credit Agreement replaced our prior $1.5 billion credit agreement, which was scheduled to expire in February 2026.No amounts were outstanding under the Five-Year Credit Agreement or under the prior revolving credit agreement as of October 26, 2025 and October 27, 2024, respectively. In addition, we have revolving credit facilities with Japanese banks pursuant to which we may borrow up to approximately $53 million in aggregate at any time.

Income TaxesThe components of income before income taxes for each fiscal year were as follows: 202520242023 (In millions)U.S.$56 $833 $1,234 Foreign9,215 7,319 6,482 Total$9,271 $8,152 $7,716 The components of the provision for income taxes for each fiscal year were as follows:202520242023 (In millions)Current:U.S.$675 $1,254 $708 Foreign411 366 456 State34 33 54 1,120 1,653 1,218 Deferred:U.S.382 (697)(255)Foreign788 30 (61)State(17)(11)(42)1,153 (678)(358)Total$2,273 $975 $860 A reconciliation between the statutory U.S. federal income tax rate and our actual effective income tax rate for each fiscal year is presented below: 202520242023Tax provision at U.S. statutory rate21.0 %21.0 %21.0 %Effect of foreign operations taxed at various rates(7.3)(7.6)(8.2)Changes in prior years’ unrecognized tax benefits— — (0.2)Resolutions of prior years’ income tax filings0.2 (0.1)(0.1)Research and other tax credits(1.3)(1.4)(1.6)Remeasurement of deferred tax assets in Singapore7.1 — — Valuation allowance on corporate alternative minimum tax credits4.4 — — Other0.4 0.1 0.2 Total24.5 %12.0 %11.1 %Our provision for income taxes and effective tax rate are affected by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates and other income tax incentives. It is also affected by events that vary from period to period, such as changes in income tax laws and the resolution of prior years’ income tax filings.Our effective tax rate for fiscal 2025 was higher than the prior fiscal year primarily due to a $659 million remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore and the recognition of a $407 million valuation allowance against deferred tax assets related to corporate alternative minimum tax (CAMT) credits. These credits are not expected to be realized as a result of changes in the timing of future tax deductions, following the enactment of the One Big Beautiful Bill Act. No prudent and feasible tax-planning strategies are currently available. The amount of the valuation allowance may be adjusted in future quarters if estimates of future taxable income change.Our effective tax rate for fiscal 2024 was higher than fiscal 2023 primarily due to lower tax credits in fiscal 2024, partially offset by higher proportion of pre-tax income in lower tax jurisdictions in fiscal 2024.In the reconciliation between the statutory U.S.

Risk Management and StrategyWe have implemented processes for assessing, identifying and managing material risks from cybersecurity threats as part of our cybersecurity risk management program. This program includes processes for continuous cybersecurity risk and advanced persistent cybersecurity threat monitoring; cybersecurity attack, vulnerability and cloud security management; and penetration testing. Our cybersecurity risk management program includes a cybersecurity incident response plan and escalation protocols; cybersecurity and data protection policies and training to our employees; a supply chain cybersecurity program to increase awareness, assess supplier security controls, help improve supplier security controls and manage security incidents; a program to protect company, customer and supplier intellectual property by operationalizing strategy, policy and awareness; a privacy and data protection program to keep pace with rapidly evolving global data laws and regulations as well as emerging technologies; engagement of third-party auditors to help assure the effectiveness of internal controls, including cybersecurity controls; and partnership with industry groups, government agencies and third-party experts in an effort to continuously improve our cybersecurity risk management program. We conduct assessments based on the National Institute of Standards and Technology Cybersecurity (NIST) Framework to evaluate our program, and we engage third-parties for assistance and to independently assess, proactively monitor and provide an external view of our cybersecurity program. We conduct risk assessments and tabletop exercises to evaluate the effectiveness of our systems and processes in addressing cybersecurity threats, including threats associated with our use of third-party service providers, and to identify areas for improvements. Our cybersecurity risk management program is integrated with our enterprise risk management (ERM) program, and information about cybersecurity risks and our cybersecurity risk management program is reviewed as part of our ERM program, sharing common risk governance and reporting processes that apply across our ERM program.

Earnings Per ShareBasic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of restricted stock units and employees’ stock purchase plan shares) outstanding during the period. Our net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to our non-complex capital structure. Fiscal Year202520242023 (In millions, except per share amounts)Numerator:Net income$6,998 $7,177 $6,856 Denominator:Weighted average common shares outstanding804 827 840 Effect of weighted dilutive restricted stock units and employees’ stock purchase plan shares4 7 5 Denominator for diluted earnings per share808 834 845 Basic earnings per share$8.71 $8.68 $8.16 Diluted earnings per share$8.66 $8.61 $8.11 Potentially weighted dilutive securities— — — Excluded from the calculation of diluted earnings per share are securities attributable to outstanding restricted stock units where the combined exercise price and average unamortized fair value are greater than the average market price of our common stock, and therefore their inclusion would be anti-dilutive.

Balance Sheet Detail October 26,2025October 27,2024 (In millions)InventoriesCustomer service spares$1,786 $1,742 Raw materials2,007 1,680 Work-in-process914 879 Finished goodsDeferred cost of sales229 217 Evaluation inventory474 459 Manufactured on-hand inventory505 444 Total finished goods1,208 1,120 Total inventories$5,915 $5,421 October 26,2025October 27,2024 (In millions)Other Current AssetsPrepaid income taxes and income taxes receivable$148 $120 Prepaid expenses and other1,060 974 $1,208 $1,094 Useful LifeOctober 26,2025October 27,2024 (In years)(In millions)Property, Plant and Equipment, NetLand and improvements$558 $492 Buildings and improvements3-302,930 2,359 Demonstration and manufacturing equipment5-82,708 2,578 Furniture, fixtures and other equipment3-5855 782 Construction in progress1,460 898 Gross property, plant and equipment8,511 7,109 Accumulated depreciation(3,901)(3,770)$4,610 $3,339 Depreciation expense was $389 million, $346 million and $471 million for fiscal 2025, 2024 and 2023, respectively.October 26,2025October 27,2024(In millions)Deferred Income Taxes and Other AssetsNon-current deferred income taxes$1,233 $2,393 Operating lease right-of-use assets509 375 Income tax receivables and other assets806 314 $2,548 $3,082 October 26,2025October 27,2024 (In millions)Accounts Payable and Accrued ExpensesAccounts payable$1,978 $1,570 Compensation and employee benefits1,221 1,188 Warranty346 364 Dividends payable365 327 Income taxes payable380 535 Operating lease liabilities, current91 87 Restructuring reserve165 — Other787 749 $5,333 $4,820 October 26,2025October 27,2024 (In millions)Other LiabilitiesDefined and postretirement benefit plans$151 $142 Operating lease liabilities, non-current404 259 Other519 409 $1,074 $810 Government AssistanceCapital expenditure related incentives reduced gross property, plant and equipment, net by $1.2 billion as of October 26, 2025. Contra-depreciation expense was not material in fiscal 2025. Operating incentives recognized as a reduction to research, development and engineering expense was $31 million in fiscal 2025. Capital expenditure related incentives reduced our income taxes payable by $781 million as of October 26, 2025, of which $233 million is in other current assets and $548 million is in deferred income taxes and other assets, in our Consolidated Balance Sheets.

Restructuring ChargesFiscal 2025 Restructuring PlanIn the fourth quarter of fiscal 2025, we approved a workforce reduction plan (Fiscal 2025 Restructuring Plan) to position us for continued growth as a more competitive and productive organization and expect approximately 4% of our global workforce to be impacted under this plan. The majority of the charges related to the Fiscal 2025 Restructuring Plan were recognized in the fourth quarter of fiscal 2025 and consist primarily of severance and other employment termination benefits to be paid in cash, and other non-cash related charges.