Annual report
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2025 annual repor t
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FOLLOW US ONLINE AT: WEB SITE : APPLIEDMATERIALS.COM INVESTOR RELATIONS : IR.APPLIEDMATERIALS.COM
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a pplied materials 2025 a nnual rep o rt Dear Fellow Shareholders , Applied Materials delivered record revenue and earnings per share in fiscal 2025, marking our sixth consecutive year of growth. Over this period, we have grown revenue and earnings per share at annualized rates of approximately 12 percent and 20 percent, respectively. We are in the early stages of a new computing era, and the o pportunities for the semiconductor industry and Applied Materials have never been greater. Semiconductors provide the foundation for advances in technology that are reshaping the global economy, including artificial intelligence (AI), the internet of things, robotics, electric and autonomous vehicles, and clean energy. T o prepare for the exciting opportunities ahead, Applied has built new capabilities, strengthened our product portfolio and streamlined our organization. Now more than ever the work we do together advances the world’s technology. INFLECTION-FOCUSED INNOVATION In addition to fueling industry growth, AI computing is reshaping the semiconductor roadmap and changing the way chips are designed and manufactured. The foundational semiconductor technology develo ped and delivered to customers by Applied Materials plays a critical role in im proving the energy efficiency of AI in the datacenter and at the edge. At A pplied, our core strategy is inflection-focused innovation. We partner with our customers to recognize technology inflections early, and we focus our research and development on the hi ghest value technology inflections in the fastest growing areas of the market. We then create highly differentiated solutions by connecting our broad port folio of capabilities and technologies. For example, in fiscal 2025, we launched several innovative products that extend our leadership in the ma jor technology inflections essential to energy-efficient AI computing: leading-edge logic, high-performance DRAM, high-bandwidth memory, and advanced packaging. These products enable higher performance, lower power advanced logic and memory chips, and improve factory yields. As deployment of AI accelerates globally, Applied is well positioned at the most valuable technology inflections in the fastest growing areas o f the market. HIGH-VELOCITY CO-INNOVATION A key theme we consistently hear from our customers and ecosystem partners is that co-optimization of the technology stack is more critical than ever. Over the past year, we strengthened and expanded our collaborations with technology leaders, universities and research institutes. In addition, Applied’s “high- velocity, co-innovation” model is designed to accelerate new chip and system architectures by providing chip makers and chip designers much earlier access to next-generation process technology. This is a core value proposition of our Equipment and Process Innovation and Commercialization (EPIC) platform. Construction of the platform’s flagship facility – the EPIC Center in Silicon Valley – is on track, and we are excited to begin operations in 2026. The EPIC Center will be the largest and most advanced facility of its ty pe globally. By co-locating chip makers, chip designers, university researchers and other ecosystem partners under one roof, we believe we can reduce the time it takes the industry to bring a new technology from conce pt to commercialization by as much as 30 percent. As our customers race to bring complex new device architecture inflections to market, we are also providing advanced service solutions that hel p them quickly transfer new technology from R&D labs into pilot lines and then rapidly optimize device per formance, yield
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applied materials 202 5 a nnual rep o rt WELL POSITIONED FOR FUTURE GROWT H Looking ahead to 2026 and beyond, we expect large- scale AI adoption will drive substantial investment in AI-computing infrastructure including advanced semiconductors and wafer fab equipment. Our customers are en gaging with us early to ensure we are ready to support significant production ramps in the coming years. Inside the company, we are adopting AI and digital too ls to drive higher velocity and productivity, innovate the way we work, and streamline our organization to meet the tremendous opportunities ahead. At Applied Materials, we deliver material innovation that chan ges the world. Our inflection-focused innovation strategy puts us in a great position to extend our leadershi p in the semiconductor technologies essential to high- performance, energy-efficient computing. Sincerely, and cost in high-volume production. In fiscal 2025, the recurring services and parts portion of Applied Global Services delivered another year of double-digit growth with more than two-thirds of this core service revenue generated from subscriptions. As a leader in the technology ecosystem, we are committe d to working closely with our customers, suppliers and partners to reduce the environmental impact of chipmaking and support the responsible growth of the semiconductor industry. Applied is advancing energy-efficient com puting through materials engineering innovations that underpin AI and other data-heavy a pplications as well as driving progress towards our 2030 goals for our own carbon emissions . Thomas J. I annotti Chairman o f the Board Gary E. Dickerso n Presi dent an d Chie f Executive Off icer Decem ber 31, 202 5
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a pplied materials 2025 a nnual rep o rt This Annual Report contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industr y outlooks and demand drivers, technolo gy transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our sustainability strategies and tar gets, our business outlook, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include those discussed in the “Risk Factors” section of, and elsewhere in, this report. Forward-looking statements are based on management’s estimates, projections and expectations as of the date hereof, and we undertake no obligation to update any such statements. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPM G LLP Santa Clara, Cali forni a NUMBER OF REGISTERED SHAREHOLDERS 2,626 (as of December 5 , 2025) STOCK LISTING Applied Materials, Inc. is traded on The Nas daq Global Se lect Mar ket® Nasda q Symbol: AMA T TRANSFER A GEN T Mail correspondence to : Com putershare T rust Com pany, N.A . Stockholder Services P.O. Box 4307 8 Provi dence, RI 02940-307 8 Send overnight correspondence to : Computers hare 150 Royall St., Suite 10 1 Canton , MA 0202 1 Online inquiries : www-us.computershare.com/investor/Contact Tel: (312 ) 360–5186 or (877 ) 388–518 6 Fax: (312) 601–434 8 SHAREH O LDERS’ INF O RMATI ON INVESTOR CONTAC T Investor Relation s Applied Materials, Inc . 3050 Bowers Avenue P.O. Box 58039 , M/S 520 6 Santa Clara , California 95054-329 9 Tel: (408 ) 748–5227 Email: investor_relations@amat.co m CORPORATE HEADQUARTER S Applied Materials, Inc . 3050 Bowers Avenue Santa Clara, Cali fornia 95054–329 9 MAILIN G ADDRESS AND TELEPH ONE Applied Materials, Inc . 3050 Bowers Avenue P.O. Box 5803 9 Santa Clara, Cali fornia 95054–329 9 Tel: (408 ) 727–5555 CORP ORATE WEB SIT E Additi onal inf ormation can b e found at www.a ppl iedmateria ls.co m
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark one) ☑ ANNUAL REPORT PURSUANTT O SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscaly e ar ended October 26, 2025 or ☐ TRANSRR ITION REPORTP URSUANTT O SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-06920 Applied Materials, Inc. (ExactEE name of regie stii rat nt as specifiei d in itstt charter) Delaware 94-1655526 (StateSS or other jurisdiction of incorporation or organi zaii tion) (I.R.S. Emplm oyer Idendd tifici ation No.) 3050 Bowers Avenue, P.O.B ox 58039, Santa Clara, California 95052-8039 (Address of principali executive officff es)s (ZipZZ Code) Regie straii nt’stelephone numbee r, including area code: (408) 727-5555 Securities registered pursuantt o Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Common Stock, par value $.01 per share AMAT Th e Nasdaq StockM arketL LC Securities registered pursuantt o Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑ Indicate by check mark whether the registrant (1) has filed all reports required to be filedb y Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subju ect to suchf iling requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registranth ass ubmu itted electronically everyrr Interactive Data File required to be submu itted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submu it). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑ Accelerated filer ☐ Smaller reporting company ☐ Non-accelerated filer ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registranth as elected not to use thee xtended transition period for complying with anyn ew or revised financiala ccounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registranth as filed a report on and attestation to its management’s assessment of the effeff ctiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm thatp repared or issued its audit report. ☑ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect thec orrectiono f an error to previously issued financial statements. ☐ Indicate by check mark whether anyo f thosee rror corrections are restatements that required a recovery analysis of incentive-based compensation received by anyo f the registrant’s executiveo fficers during the relevant recovery periodp ursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑ Aggregate market value of the voting stockh eld by non-affiff liates of the registrant as of April 27, 2025, based upon thec losing sale price reported by the Nasdaq Global SelectM arket on that date: $121,318,219,350 Number of shares outstanding of the registrant’s Common Stock, $0.01 par value, as of December 5, 2025: 792,943,366 DOCUMENTS INCORPORATRR ED BY REFERENCE: Portions of Part III will be provided in accordance with Instruction G(3) to Form 10-K no later than February 23, 2026.
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Caution Regarding Forward-Looking Statements This Annual Report on Form 10-K of Applied Materials, Inc. and its subsu idiaries, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, contains forward-looking statements that involve a number of risks andu ncertainties. Examples of forward-looking statements include those regarding our future financial or operating results, customer demand and spending, end-user demand, trends ando u tlooks in our markets and industries, cash flows and cash deployment strategies, declaration of dividends , share repurchases, businesss trategies andp riorities, costs and cost controls, products, competitive positions, management’s plans and obj ectives for future operations, research and development, acquisitions, investments andd ivestiturtt es, growth opportunities, restructurt ing and severance activities, backlog, working capital, liquidity, investmentp o rtfolff io and pol icies, taxes, supplyu chain, manufactff urt ing, prop erties, legal matters, claims and proc eedings, ando ther statements thata r e noth i storical facts, as wella s their underlying assumptions. Forward- looking statements may contain wordss u cha s “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “potential” and “continue,” the negative of these terms, or other comparable terminology. All forward-looking statements are subju ect to risks andu ncertainties ando ther important factors, including those discussed in PartI , Item 1A, “Risk Factors,” below and elsewhere in this report. These and manyo t herf a ctors could affeff ct our future financial condition ando perating results and could cause actuat l results to differ materially from expectations basedo n forward- looking statements made in this document or elsewhere by us or on our beha lf.ff Forward-looking statements are basedo n management’s estimates, projections and expectations as of the date hereof, and we undertake no obligation to revise or update any such statements. The following information shouldb e read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included int h is report. 2
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APPLIED MATERIALS, INC. FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 26, 2025 TABLE OF CONTENTS Page PART I Item 1: Business 4 Item 1A: Risk Factors 11 Item 1B: Unresolved Staff Comments 23 Item 1C: Cybersecurity 23 Item 2: Properties 24 Item 3: Legal Proceedings 25 Item 4: Mine Safety Disclosures 25 PART II Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6: [Reserved] 27 Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A: Quantitative and Qualitative Disclosures About Market Risk 39 Item 8: Financial Statements and Supplementary Data 39 Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 39 Item 9A: Controls and Procedures 40 Item 9B: Other Information 40 Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 40 PART III Item 10: Directors, Executive Officers and Corporate Governance 41 Item 11: Executive Compensation 41 Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 42 Item 13: Certain Relationships and Related Transactions, and Director Independence 43 Item 14: Principal Accounting Fees and Services 43 PARTI V Item 15: Exhibits, Financial Statement Schedules 44 em 16: Form 10-K Summary 44 Signatures 87 3
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PART I Item 1: Busineii ss Applied Materials, Inc. is the leader in the materials engineering solutions used to produce virtuat lly everyrr semiconductor in the world. Semiconductors provide the foundation for advances int echnology that ar e reshaping the global economy, including artificial int elligence, the internet of things, robotics, electric and autonomous ve hicles, and clean energy. We are experts in the design, dev elopment, production, and servicing of thec r itical wafer fabra ication tools our customers need to manufactff urt e semiconductors. Our customers’ producdd ts are used across personal computing devices, mobile phones, artificial intelligence (AI) andd ata center servers, automobiles, connected devices, industriala p p lications and consumer electronics. We are wellp o sitioned to address the increasing complexityi n manufactff urt ing semiconductors, by leveraging the semiconductor capitale quipment industry’rr s most comprehensive portfolff io of produc ts to connecta nd co-optimize our technologies. This enables our customers to evolve their semiconductor technology roadmapsa and achieve supeu rior results in their products. Incorporated in 1967, we are a Delaware corporation. Our fiscaly ear ends on the last Sunday in October. We operate in two reportabla e segments: Semiconductor Systems and Applied Global Services® (AGS). The Semiconductor Systemss egment represents the largest contributor to ourn et revenue. A summaryo frr financiali nformation for each reportabla e segment is found in Note 15 of Notes to Consolidated Financial Statements. A discussion of factors that could affeff ct operations is set forthu nder “Risk Factors” in Item 1A, which is incorporated herein by reference. Semiconductortt Systemtt s Our Semiconductor Systemss e gment designs, dev elops, manufactff urtt es and sells a wide range o f equipment used to fabra icate semiconductor chips, also referred to as integrated circuits (ICs). The Semiconductor Systemss egment consists of the semiconductor capital equipment industry’rr s most comprehensive portfolff io of produc ts used in thec hipm a king proc ess. Our products addresss teps across materials engineering, proc ess control and advanced packaging, including thec o nversiono f patterns into device structurt es, transistor and interconnect fabra ication, metrology, inspection and review, andp a ckaging technologies for connecting finished IC die. In addition to providing equipment for individual processs teps, we have the ability to combine, co-optimize and integrate our technologies to developh i g h l yd ifferentiated solutions for our customers. Our equipment helps customers improve the power, performance, yield and costs of semiconductor devices. Our patterning systems and technologies address challenges resulting from shrinking pattern dimensions and the growing complexityi n vertical stacking found int oday’s mosta dvanced semiconductor devices. Our transistor and interconnect products and technologies enable continued pow er andp erformance improvements of 3D transistors. Our process control systems employ optical and eBeam technologies that allow customers to inspecta nd review critical semiconductor architecturt es throughout the manufacff turing proc ess, helping improve chipy i elds. Our advanced packaging systems use our materials engineering expertise to allow customers to connect multiple chips together through h eterogeneous integration, enabling them to advance the technology roadmap beyonda a singlec hip, leading to performance and energy-effiff ciency improvements. Our Semiconductor Systemss ales are to customers that serve the following markets: foundry, logic ando ther; dynamic random access memory( DRAM); and flash memory (NAND). Foundry, logic, ando ther is comprisedo f leading-edge and non- leading edge technology nodes. Leading-edge represents customers that are producing on the mosta dvanced technology nodes, defined as 7n a n ometers and smaller. Non-leading edge technology nod ess e rve marketss u cha s internet of things, communications, automotive, powera nd sensors. 4
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Applpp iell dG loGG bal Services OurA GS segment providess ervices,s pares and factoryarr utomations oftwff are toc ustomerf abff rication plantsg lobally. Through October2 6, 2025, our AGS segmenta lsom anufactff urt ed ands old2 00 millimeter( 200mm) ando ther equipment to customersg lobally that serven on-leading-edge markets. Effeff ctive the firstq uarter of fiscal 2026 , our 200 mme quipment businessw illb em oved too ur SemiconductorS ystems segment. AGS’s transactionala nd subsu criptions ervice products,s pares and factoryarr utomations oftwff are is purchased by customers too ptimize the performance of our large, global installedb aseo fs emiconductora nd o there quipment. These solutions are alsou sed too ptimize p lantp erformance andp roductivity.C ustomerd emand isf ulff filled through a global distributions ystema nd trainedf ieff ld engineers located near customer sites tos upporto ur semiconductora nd o there quipment worldwide. Othertt Wea lso manufacff ture products ands erve customers inc ertain other industries, including manufactff urt inge quipmentf orff the displayi ndustry.rr Thef inff ancial results of our businesses thata re not included in our SemiconductorS ystems segmento ro ur AGS segment, sucha s our display business, arer eported in the Corporate and Otherc ategory. 5
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Backlog We manufactff urt e systems to meet demand representedb yo r der backlog and customer commitments. Backlog consisted of:ff (1) orders for which written authorizations have be ena ccepted, or shipmenth as occurredb u t revenue has not been recognized; and (2) contractuat l service revenue and maintenance fees. Backlog by reportabla e segment as of October 26, 2025 was as follows: 2025 (In millions, except percentages) Semiconductor Systems $ 7,105 47 % Applied Global Services 7,141 48 % Corporate and Other 756 5% Total 15,002 100 % Of the total backlog as of October 26, 2025, approximately 31% is not reasonably expected to be filled within the next 12 months. Our backlog on anyp a rticular date is notn ecessarily indicative of actuatt l sales for any future periods. Our backlog is subju ect to change, including the additiono f new orders, potentiala mendments or cancellations of existing orders, and changes in export rules and regulations. Customers mayd elayd elivery of products or cancel orders prior to shipment, subju ect to possible cancellation penalties. Delays in deliveryrr schedules or a reduction of backlog during anyp articular period could have a material adversee ffeff ct on our business and results of operations. Manufacff turing, Raw Materials and Supplies Our worldwide manufacff turing activities consist primarily of assembly, integration and test of v arious p roprietaryrr and commercialp arts, components and subau ssemblies that are used to manufactff urt e systems. We utilize a distributed manufacff turing model under which manufacff turing and supplyu chain activities arec o nducted in various countries, including United States, Singapore, Japan,a China, Korea, Taiwan, Israela ndo ther countries in Asia and Europe. We use qualifiedv e ndors, including contract manufactff urt ers, to suppu ly parts, services and produc t supporu t. Our supplyu chain strategy commits to adhere to ethical labor pra actices, responsible minerals sourcing, Responsible Business Alliance and SEMI guidelines, and the Applied Materials Standards of Business Conduct. Although we make reasonable effortff s to assure thatp a rts are availabla e from multiple qualified supplu iers, this is not always po ssible. Accordingly, some key pa rts may be obt ained from only a qualified single supplu ier or a limited group of qualified supplu iers. We seek to reducec osts and to lower the risks of manufactff urt ing and service interruptu ionsb y selecting and qualifyingff alternate supplu iers for parts; monitoring the financial condition of key supplu iers; maintaining appropriate inventories of parts; qualifying neff w parts on a timely basis; and ensuring quality andp erformance of parts. Research, Development and Engineering Our long-term growth strategy requires continued deve lopment of new materials engineering solutions, including products andp l atforms that enable expansion into new and adjad cent markets. Our significant investments in RD&E must generally enable us to deliver new products and technologies before thee mergence of strongd emand, thus allowing customers to incorporate these products into their manufactff urtt ing plans during early-stage technology selection. We work closely with our global customers and ecosystem partners to design systems and proc esses that meetp l anned technical and produc tion requirements. Our product development and engineering, and proc esss u pporu t are performed primarilyi nt h e United States, Indiaa n d Israel. Our customer demonstrations are perforff medp rimarilyi nt h e United States, China, Taiwan, Israela nd South Korea. 6
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Marketinga ndS ales Because of the highly technical nature of our producd ts, we marketa nd sell products worldwide almost entirely through a direct sales force. We have operations in many countries, with some of our business activities concentrated in certain geographic areas. Our business is basedo n capia tal equipment investments by major semiconductor ando ther manufactff urt ers, and is subju ect to significant variability in customer demand for our produc ts. Customers’ expenditures depend o n many factors, including: general economic conditions; anticipated market demand andp ricing for semiconductors ando ther electronic devices; the development of n ew technologies; customers’ factory ut ilization; capital resources and financing; trade policies and export regulations; and government incentives. Informationo nn et revenue to unaffiliated customers and long-lived assets attributable to our geog raphic regions is included in Note 15 of Notes to Consolidated Financial Statements. During fiscal 2025 , two customers accounted for approximately 19% and 15%, respectively, of our net revenue. Competition The industries in which we operate are highly competitive and characterized by rapida technological change. Our ability to compete generally depends on ou r ability to commercialize our technology in a timely ma nner, continually improve ou r products, andd e v elopn ew products that meet constantly evolving customer requirements. Significant competitive factors include technical capability and differentiation, produc tivity, cost-effectiveness and the ability to supporu t a global customer base. The importance of these factors varies according to customers’ needs, including produc t mix and respective product requirements, applications, and the timing and circumstances of purchasing decisions. Subsu tantial competition exists across all the segments of our business. Competitors range from small companies that compete in a single region, which mayb e nefit from policies and regulations that favor domestic companies, to global, diversified companies, which operate in more complex global economic and regulatory environments. Wec ould see increased competition from domestic equipment manufactff urtt ers in China resulting from local government incentives and funding as wella se xport controls establa ished by the United States government to restrict the sale of certain technologies to customers in China. Export controls enacted by the United States government that restrict the sale of certain technologies to customers in China may also provide an a dvantage to our international competitors. Our ability to compete requires a high level of investment in RD&E, marketing and sales, and globa l customer supporu t activities. We believe that many of our produc ts have strong competitive positions. Thec ompetitive environment for each segment is described below. The semiconductor industryrr is driven by d emand for advanced electronic products, including smartphones ando ther mobile devices, servers, personal computers, automotivee lectronics, storage,a ndo ther products. The growth of data and emerging end-market driverss u cha s artificial i ntelligence, the internet of things, robotics and smart vehicles are also creating the next waveo f growth for the industry.rr As a result, products within the Semiconductor Systemss e gment are subju ect to significant changes in customer requirements, including transitions to smaller dimensions, increasingly complex chip architecturtt es, new materials and an increasing number of applications. While certain existing technologies may be adapted to new requirements, some applications create the need for an entirely di fferent technological approa ch. The rapid paa ce of technological change can quickly diminish the value of current technologies and products and create opportunities for existing and new competitors. Our comprehensive portfolff io offersff a variety of di fferentiated produc ts, including co-optimized and integrated materialss o lutions that enable unique films, structurt es andd e vices. We must successfulff ly anticipate technology inflections, and our produc ts must continuously evolve to satisfy customers’ requirements to compete ef feff ctively in the marketplt ace. Wea l locate resources among our nu merous p roducd t offeriff ngs and thereforff e mayd ecide not to invest in an individual product depending o n market requirements. Competitorss e rving the semiconductor equipment industryrr range from companies offeriff ng a single product line to others offeriff ng multiple product lines, and those that serve a single region to global, diversified companies. The products and services offereff db y the AGS segment enhance those of the Semiconductor Systemss e gment, particularlyi nm a rkets with demanding global service requirements. Competition in the AGS segment includes a diverse group of third-party service providers as wella sc ustomers that choose to perform their own service. To compete effeff ctively, we offerff products and services to improve system performance, lower overall cost of ownership, and increase yields and productivity of customers’fab opea rations. Significant competitive factors include cost-effectiveness and the level of technical service and supporu t. The importance of these factors varies according to customers’needs and the type of products or services offereff d. 7
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Patents and Licenses Protectiono fo u r technology assets through enforcement of our intellectuat l property rights, including patents, is important for our competitive position. Our practice is to file patent applications in the United States ando ther countries for inventions that we consider significant. We have more than 23,500 active patents in the United States ando ther countries, and additional applications are pending for new inventions. Although we do not consider our business materially dependent upo n anyo n e patent, our rights and the products made and sold under our patents, taken as a whole, are a significant element of our business. In addition to our patents, we possess other intellectual prop erty, including trademarks, know-how, trade secrets, and copyrights. Wee nter into patent and technology licensing agreements with other companies when iti s determined to be in our best interest. We pay royalties under patent license agreements for the use, in some of our produc ts, of certain patented technologies. Wea l so receive royalties from licenses granted to thirdp a rties. Royalties received from orp a id to thirdp a rties have not been material to our consolidated results of operations. In the normal course of business, we periodically address the possibility of patent infringement. Inr esponding to such inquiries, itm ayb ecome necessary or usefulff for us to obtain org rant licenses or other rights. However, there canb e no assurance that such licenses or rights will be availabla e to us on commercially reasonable terms, or at all. If we are nota ble to resolve or settle claims, obtain necessary licenses on commercially reasonable terms, or successfulff ly prosecute or defend our position, our business, financial condition and results of operations couldb e materially and adversely affeff cted. Governmental Regulation As a public company with global operations, we are subju ect to the laws and regulations of the United States and multiple foreign jurisdictions. These regulations, whichd iffer among jurisdictions, include those related to financial ando ther disclosures, accounting standards, securities, corporate governance, public procurement and publ ic funding, intellectuatt l property, tax, trade (including import, export and customs), antitrusrr t, cybersecurity, environment (including those related to sustainability and climate), health and safety, employment, immigration and travel regulations, human rights, privacy, da ta protection and localization, and anti-corruptu ion. See “Risk Factorsrr – Legal,e Compliance and Othett r Risksii – We are exp osed to risks related to the global regulatore ye n v irr ronment” for furthett r details. Wea r e regulated under various international laws regarding the purchase and sale of goods and related items, including butn ot limited to those related to trade policies and export regulations, and limitations on transferff of intellectuat l property. See “Risk Factorsrr – Business and Industryrr Risksii – Global tradedd issues and changes in and unc ertainties with respect to trade policies and export regulate ions, including imporm t and exporx t lic ense requirements,tt trade sanctions, tariffsi and international trade di spii utes, have adverserr ly impacm ted and could furthett r adverserr ly im pacm t our business and op erations, and r educe the competitiveness of our products and services relative to local and global competitors” for furthett r details. With respect to environmental, health and safety regulations, we maintain a number of programs that ar e primarily preventative in nature and regularlym o nitor ongoing compliance with appl icable laws and regulations. In addition, we have trained personnel to conduct investigations of any environmental, health, or safetyi ncidents, including, but not limited to, spills, releases, or pos sible contamination. See alsoll “Risk Factorsrr – Legal,e Compliance and Othett r Risksii – We are subject to risks associated with environmental, health and safetya regulate ions” for furthett r details.ll Wea r e subju ect to income taxes in the United States and foreign jurisdictions. Our provision for income taxes, effeff ctive tax rate and financial results can be and are affeff cted by nu merous factors, including changes in applicable tax laws, interpretations of applicable tax laws, amount and composition of pre-tax incomei nj u risdictions with differing tax rates, and valuationo f deferred tax assets. There have be en a number of proposed c hanges in the tax laws that could increase our tax liabia lity. See “Risk Factorsrr – Operational an d Financial Risksii – We operate in ju risdictions with complexee and changing taxaa laws” for furthett r details. For additional discussions regarding the impact of compliance withi ncome tax laws and regulations on our business ando p erations, see alsoll “ManageMM ment’s Discii ussion and Analysll is of Financial Condition and Resultstt of Operations– Resultstt of Operations – Income Taxesaa ” and Note 13 of the Notes to the Consolidatdd ed Financial Statements. 8
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Our People Our commitment to innovation begin s with thec o mmitment to creating an environment in which our employees cand o their best work. Our ability to create differentiatedv alue in the marketplt ace is driven by the capa bility of our peopl e to anticipate technology inflections and integratec u stomer requirements. To achieve this level of v aluec reation, we believe we must continue to attract, hire, develop and retain a world-class global workforce. We invest in our employees by providin g quality training and learning opporr tunities, a compelling career path, building a connected and highl y engaged culturt e, and upholding a high standard of ethics and respect for human rights. As of October 26, 2025, we employed approximately 36,500 regular full-time employees spanning 25 countries, of whom approximately 46%, 42% and1 2% resided in the Asia-Pacific region, North America, and Europe/Middle East, respectively. Connected and Collaboratll ivtt e Culture We value great talent and having employees with a broad mix of perspectives, skills and experiences. We thereforff e strive to provide fair and equal opportunity for career development and advancement to all our employees and to build a connected and highly engaged culture where all of our employees feel they belong. We seek to cultivate a culture that reflects our values – being the Most Valued Partner, being part of a Winning Team, operating withR esponsibility & Integrity, and achieving World Class Performance. Talent Acquisition and Retentiontt We believe that our future success is highly dependent upo n our continued ability to attract, develop, retain and engage employees. As part of our effortff to attracta nd retain employees, we offerff competitive rewards, compensation andb e nefits, including an Employee Stock Incentive Plan, an Employees’ StockP urchase Plan, healthcare and retirement benefits, parental and family leave, adoption credits, holiday andp aid time off,ff and tuition assistance. Employm ee Learning & Developmll ent We seek to create growth andd e v elopment opportunities to supporu t an engaged and connected workforce. We promote holistic employee learningr andd e v elopment basedo n the 70/20/10 model--70% on-the-jo- b learning, 20% social/collabora ative and1 0 % formal training, with a focus on advancing technical skills as wella s improving gen eral business acumen to address increasing work complexity. Also, to help expand prof esff sional breadth, the segments and functions provid e technical and job- specific training tied to their disciplines, while general profesff sional, management, and leadershipt raining is provided at the corporate level. Allt raining is coordinated centrally and aligned with common objectives through Applied Global University. In addition to instructor-led and web-based training, we offerff state-of-tff he-art training modalities, sucha s AI-based simulations and Augmented and Virtuatt l Reality learning capabilities, to further the development of ou rn ew products, train our manufactff urt ing and field supporu t employees, and facilitate remote collaboration. Employm ee Engagement We have historicallym easured employeee ngagement through surveys to gaini nsight into employees’experiences, levels of workplkk ace satisfaction, andk e yd rivers for engagement, belonging and overall well-being. During fiscal 2025, we conducted an all-employee survey, which was conducted anonymously through an externalp a rtner to encourage maximum participation and elicit candid responses. Wea lso benchmarked the results of that survey against a large and standardized data set involving large technology companies globally. We use the results of employee surveys like the one we conducted in fiscal2 025 and the associated benchmarking da tat o help us be tter understand enterprise-wide trends, gaug e effeff ctiveness of interventions, and define targeted em ployee populations (e.g., early tenuree m ployees). Employee survey results are also used to provide leaders and peopl e managers witha ctionable insights tailored to their own group s that can further enhancee m ployeee n gagement and collabora ation. These actionable insights are then integrated with the people strategy process and cadence within Applied. Additional information regarding our activities related to our peopl e and sustainability, can be found in our latest Impact Report, which is located on our website at https://www.appliedmaterials.com/us/en/corporate-responsibility.html. The Impact Report is updated annually. This website address is intended to be an inactive textual reference only. None of the information on, or accessible through, our website is part of this Form 10-K or is incorporated by reference herein. 9
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Information about oure xecutive offiff cers The following tabla e and notes set forth information about our executive offiff cers: Name of Individual Position Gary E. Dickerson(1) President, Chief Executive Offiff cer Brice Hill(2) Senior Vice President, Chief Financial Offiff cer and Global Information Services Prabu Rajaa (3) President, Semiconductor Products Group Timothy M. Deane(4) Senior Vice President, Applied Global Services Teri Little(5) Senior Vice President, Chief Legal Offiff cer and Corporate Secretary Omkaram Nalamasu(6) Senior Vice President, Chief Technology Offiff cer (1) Mr. Dickerson, age 68, was named President of Applied in June 2012 and appointed Chief Executive Offiff cera nd a member of the Boardo fD irectors in September 2013. Before joining Applied, he served as Chief Executive Offiff cera nd a director of Varian Semiconductor Equipment Associates, Inc. (Varian) from 2004 untili ts acquisition by us in November 2011. Prior to Varian, Mr. Dickerson served 18 years withK LA-Tencor Corporation (KLA-Tencor), a supplu ier of process control andy i eld management solutions for the semiconductor and related industries, where he held a variety o f operations and produc t development roles, including President and Chief Operating Offiff cer. Mr. Dickerson started his semiconductor career inm anufacff turing and engineering management at General Motors’ Delco Electronics Division and then AT&TT echnologies. (2) Mr. Hill, age 59, has been Senior Vice President and Chief Financial Offiff cer since March 2022. He also oversees Global Information Services for Applied. Prior to joining Applied, Mr. Hill was Executive Vice President and Chief Financial Offiff cer of Xilinx, Inc., a company that designed andd e v eloped programmabla e devices and associated technologies, from April 2020 until its acquisitionb y Advanced Micro Devices, Inc. in February 2022. Prior to Xilinx, Mr. Hill served in various finance positions with Intel Corporation for 25 y ears, most recently as Corporate Vice President and Chief Financial Offiff cer and Chief Operating Offiff cer, Technology, Systems and Core Engineering Group. (3)D r. Rajaa , age 63, has been President, Semiconductor Products Group since March 2023. He previously served as Senior Vice President, Semiconductor Products Group of Applied from November 2017 to March 2023, andb efore that served in various senior management, produc t development ando p erational roless ince joining Applied in 1995, including Group Vice President and General Manager of the Patterning and Packaging Group. (4) Mr. Deane, age 60, ha s been Senior Vice President, Applied Global Services since December 2024 andp reviously served as Group Vice President, Applied Global Services since September 2022. He joined Applied in 1995 andp reviously served in various senior management and field op erations roles, including h ead of Field Operations and Business Management for the Semiconductor Products Group, Account General Manager and Region General Manager. (5) Ms. Little, age 61, joined Applied as Senior Vice President, Chief Legal Offiff cera nd Corporate Secretaryrr in June 2020. Prior toj o ining Applied, Ms. Little served as Executive Vice President, Chief Legal Offiff cera nd Corporate Secretaryrr at KLA Corporation from August 2017 to June 2020. Prior to that she was Senior Vice President, General Counsela n d Corporate Secretaryo frr KLA Corporation from October 2015 until August 2017, andp rior to that she held various o ther positions atK L A Corporation since 2002. Prior toj o ining KLA Corporation, she was a Senior Corporate Associate at Wilson Sonsini Goodrich & Rosati, and a Litigation Associate at Heller Ehrman White & McAuliffe.ff (6) Dr. Nalamasu, age 67, has been Senior Vice President, Chief Technology Offiff cer since June 2013 , and President of Applied Ventures, LLC, Applied’s venture capia tal arm, since November 2013. He had served as Group Vice President, Chief Technology Offiff cerf rom January 2012 to June 2013 , and as Corporate Vice President, Chief Technology Offiff cer from January 2011 to January 2012. Upon joining Applied in June 2006 until January 2011, Dr. Nalamasu was an Appointed Vice President of Researcha nd served as Deputy Chief Technology Offiff cera nd General Manager for the Advanced Technologies Group. From 200 2 to 2006, Dr. Nalamasu was a NYSTAR distinguished profesff sor of Materials Science and Engineering atR ensselaer Polytechnic Institutt e, where he also se rved as Vice President of Research from 2005 to 2006. Prior to Rensselaer, Dr. Nalamasu served in several leadership roles at BellL abora atories. Available Information Our website is http://w// ww.appliedmaterials.com. We make availabla e free of charge, on o r through ou r website, our annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably p racticable afteff r electronically filing such reports with, or furnishing them to, the SEC. The SEC’s website, www.sec.gov, contains reports, proxy and information statements, ando ther information regarding issuers thatf ile electronically with the SEC. These website addresses are intended to be an inactive textual references only. None of the information on, or accessible through, these websites is part of this Form 10-K or is incorporated by reference herein. 10
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Item 1A: Riskii Factorstt The following risk factors could materially and adversely affeff ct our business, financial conditiono r results of operations and cause reputational harm, and shouldb e carefulff ly considered in evaluating our bu siness, in addition to other information presented elsewhere in this report. Business and Industry Risksy The industries we servec an be volatile and diffii cult to predict.dd The industries in which we operate, including the global semiconductor industry, have hirr storically been cyclical and are subju ect to volatility in customer demand. Demand for our p roducd ts and services is impa cted by technology inflections and advances in fabra ication processes, new and emerging technologies and market drivers, production capacity relative to demand for semiconductor chips and electronic devices, end-user demand, the timing of customers’ investment in new or expanded fabra ication plants, customers’ capaa city utilization, produc tionv o lumes, access to affordff able capital, business and consumer buying pa tterns andg e neral economic and pol itical conditions. Artificial intelligence (AI) and technologies related to AI are a significant demand driver for the industries we serve. AI is evolving rapidlya and thee xpected timing and amount of investments related to AI can change significantly. As a result, it is difficultt o accurately forecast demand for our produc ts related to AI. Changes in demand can affeff ct the timing and amounts of customer investments int echnology and manufactff urt ing equipment and can significantly impact our operating results. The amount and mix of our customers’capitale quipment spending between different products and technologies can also significantly impact our operating results. To meet rapidlya changing d emand, we musta ccurately forecast demand and effeff ctively manage our resources, investments, production capaa city, supplyu chain, workforce, inventory ando ther components of our business. We may incur unexpected or additional costs to aligno ur business operations with changes in demand. If we do not effeff ctively manage these challenges, our business performance ando p erating results mayb e adversely impacted. Even with effeff ctive allocationo f resources and management of costs, our gros s ando p erating margins, cash flows and earnings mayb e adversely impacted during periods of changing demand. We aree xposxx ed to risks associati edtt withii an uncertain global economy. Our business and the industries in which we operate can be impacted by unc ertain or adversee c onomic and bus iness conditions, including unc ertainties andv o latility in the financial markets, national debt, fiscal or monetary concerns, inflation and changes ini n terest rates, bank failures, tariffs and trade policies and economic recession. These conditions have caused, and may in the future cause, our customers to delay, cancel or refrain from purchasing our equipment or services, which could negatively impact demand for our products and services, reduce our backlog and increase our inventory. Customers may also scale back operations, exit businesses, merge with other manufactff urtt ers, or file for bankruptcy, which can reduce our revenue and result in additional inventory or bad debt expense. Other equipment manufactff urt ers may also consolidate or form strategic alliances, which could adversely affeff ct our ability to compete. These co nditions make it more difficultt o accurately forecast operating and financial results and make bus iness and investment decisions. We mayb e required to implement additional cost reduction effortff s, including restructurt ing activities, which may adversely impact our ability to capitalize on oppo rtunities. Even during periods o f economic uncertainty or lower demand, we must continue to invest in research andd e v elopment and maintain a global business infrastructurt e to compete effeff ctively and supporu t our customers. Thec o nsequences of these co nditions could have an a dversee f feff ct on our business, financial condition and results of operations. Our investmentp o rtfolff io is subju ect to general credit, li quidity, marketa nd interest rate risks, which may be exacerbar ted by rising inflation, rising interest rates, bank failures or economic recession and the value and liquidity of our po rtfolff io and returns onp e nsion assets could be nega tively impacted and lead to imp airment charges. Wea l so maintain cashb alances in various bank accounts globally and if anyo f these financiali nstituttt ions become insolvent, it could limit our ability to access our cash and affeff ct our ability to manage our operations. We aree xposxx ed to the risks of operating a global bun sineii ss. We have produc t development, engineering, manufacff turing, sales ando ther operations d istributed throughout many countries, and some of our business activities are concentrated in certain geographic areas. Inf i scal 2025 , approximately 89% of ourn et revenue was to customers in regions outside the United States. As a result of the global nature of our operations, we are subju ect to a number of factors that could have an adverse impact on our business, financial condition and results of operations. These factors include globa l political and social conditions, sucha s policies or regulations within countries, including in China, the United States and countries in Europe and Asia, that favor domestic companies over non-domestic companies, including effortff s to promote the development and grow th of local competitors to us, or regarding national, commercial or security issues. Otherf a ctors include geopol itical turmoil, acts of war or social unrest; our ability to maintain appropriate business processes, procedurd es and internal controls in our geographically diverse operations; delays or restrictions 11
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onp ersonnelt r avela nd in shipping materials or produc ts; our ability to develop relationships withl ocal customers, supplu iers and gov ernments; performance of our geog raphically div erse third-party provid ers; impa cts of regional or globa l health epidemics, natural disasters and extreme and chronic weather events; fluctuations ini n terest rates and currency exchange rates; as wella s otherf actors discussed int h is RiskF actorss ection. Anyo f these factors mayh a ve an adverse impact on our business and manufactff urtt ing operations o r demand for our p roducdd ts and services, and our p erformance and results of operations mayb e adversely affeff cted. Globalll trade issues and changes in and uncertainties withii respect to tr ade pol iciell s and exporxx t regue lations,s includindd g import and exporxx tl i cense requirements,s trade sanctions,s tariffsi and internatiott nalt r ade di spii utestt ,s have adverserr ly impacted and couldll furthett r adverserr lyi m pact our busineii ss and op erations, ands reduce thec o mpetitivtt eness of ou r productstt and services relative to local and global competitott rs. A majority of our produc ts and services are delivered to customers inj urisdictions outside of the United States, including China, Taiwan and Korea. We also purchase a significantp o rtiono f equipment and supplu ies from supplu iers outside o f the United States. There is inherent risk, basedo n the complex relationships among the United States and thec ountries in which we conduct our business, that political, diplomatic and national security factors can lead to globalt rade restrictions and changes in trade policies and export regulations that affeff ct the semiconductor industry.rr The United States ando ther countries have imposed and may continue to impose new trade restrictions and export regulations, have levied tariffs and taxes on certain goods and could significantly increase or impose new tariffs on a broad array of goods . Trade restrictions and export regulations, or increased orn ew tariffs and additional taxes, including any retaliatory measures, can negatively impact end-user demand and customer investment in semiconductor equipment, increase our supplyu chain complexity and our manufactff urt ing costs, decrease margins, reduce thec o mpetitiveness of our p roducts, or restrict our ability to sell produc ts, provide services orp u rchase necessary equipment and supplu ies, anyo r all of which could have a material and adversee f feff ct on our business, results of operations, or financial condition. For example, certain international sales depend on ou r ability to obtain export licenses, and our inability to obtain such licenses has limited and could further limit our markets andn e g atively impact our business. Over the past several years, the U.S. government announced additional export regulations for U.S. semiconductor technology sold in China, including wafer fabra ication equipment and relatedp arts and services, with disparate impact on companies in different jurisdictions, which have limited the market for certain of our produc ts and services, adversely impacted our revenues and increased our exposure to foreign and Chinese domestic competition. The U.S. Department of Commercee x panded export license requirements for U.S. companies that sell certain products or provid e certain services to entities in China whose actions or functions are intended to supporu t military endu s es, eliminated cer tain export license exceptions for exports of certain it ems to China, added certain Chinese co mpanies to its “Entity List,” making those companiess u bju ect to additional licensing requirements, and expanded licensing requirements for exports to China of items for use in the development or productiono f integrated circuits and certain technologies. These regulations require us to obtain additional export licenses to supplyu certain of our produc ts or provid e services to certain customers in China. Obtaining export licenses may be diffi cult and time-consuming, and there is no assurance we w ill be issued licenses on a timely basis or at all. Our inability to obtain such licenses could limit our sales in China, may cause us to be displaced by foreign and Chinese domestic companies and adversely affeff ct our results of operations. The implementation and interpretationo f these co mplex rules ando ther regulatory actions taken b y the U.S. government are uncertain and evolving and may make itm ore challenging for us to manage our op erations and forecast our op erating results. The U.S. ando ther governments may promulgate new or additional export licensingo ro t her requirements that have thee ffeff ct of further limiting our ability to provide certain producd ts and services to customers outside the U.S., including China. The U.S. government may also revise or expand existing requirements or issue guidancec larifyingff the scope and applicationo f these requirements, which could change the impact of these rules on our business and manufactff urt ing operations. The U.S. government may also continue to add customers to its “Entity List,” promulgate additional restrictions, or take measures that couldd isrupt our producrr t shipments or the provision of services to certain customers. These ando ther potential futurtt e regulatory changes could materially and adversely affeff ct our business, results of operations or financial condition. As a global business with customers, supplu iers ando perations inm any countries around the world, fromt ime to time we may receive inquiries from government authorities about transactions be tween us and certain foreign entities. For example, since 2022, we have received multiple subpoenau s from government authorities requesting information relating to certain China customer shipments and export controls compliance, including fromt he U.S. Department of Justice, the U.S. Commerce Department Bureau of Industryrr and Security and the U.S. Securities and Exchange Commission. Wea r ec ooperating fully with the U.S. government in these matters. We have continued to receive related subpoenau s, as wella s requests for information, and may in the future receive additional related subpoenau s and requests for information from such or other government authorities. Any such inquiries are subju ect to uncertainties, and we cannot predictt he outcome of these inquiries, or anyo t her governmental inquires or proceedings that may occur. Anyv i o lationo r alleged violationo f law or regulations could result in significant legal costs or inl egal proceedings in which we or our employees co uldb e subju ected to fines andp e n alties and could result in restrictions o n our business and damage to our global brand and reputation, and could have a material and adverse impact on our business operations, financial condition and results of operations. 12
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Furthermore, government authorities may take retaliatory actions, imposec onditions that require the use of local supplu iers orp artnerships withl ocal companies, require the license or other transferff of sensitive data or intellectuat l property, or engage in other effortff s to promote local businesses and local competitors, which could have a material and adverse impact on our business. Manyo f these challenges are present in China and Korea, markets that represent a significant portiono f our business. We aree xposxx ed to risks and uncertaitt ntii ytt related to changes in trade policiell s, and increased tariffsi and trade dispii utestt . Our business, financial condition and results of operations mayb e adversely affeff cted by uncertainty and changes in trade policies, including tariffs, and trade disputes between the United States ando ther countries. The United States has announced changes to its trade policy, including increased tariffs on imports. These actions have caused subsu tantial uncertainty and have resulted in retaliatory measures, including n ew tariffs on U.S. goods imposed by Chinaa n do ther countries. Some of these actions have been followed by announcements of limited exemptions and temporaryp a u srr es and trade frameworks with certain countries. A significant number of our customers and supplu iers are located outside of the United States. Increases in tariffs increase our costs and can negatively impact our margins and reduce thec ompetitiveness of our produc ts due to the increase in the cost of importing materials, parts and components used in manufacff turing our produc ts. Tariffs can al so increase supplyu chain complexity and may make itm ore difficultt o purchase necessary equipment and supplu ies to manufactff urt e our produc ts. Increases int ariffs, including reciprocal and sector-based tariffs, also increase thec o st to our customers of importing our products, which could harm customer demand for our p roducdd ts. Uncertainty or volatility with respect to tariffs and trade disputes may also make it difficult for us and our customers and supplu iers to make and execute business and capitale quipment investmentp l ans; lead to global or regional inflation and economic recession and reduce demand for semiconductor chips and electronic devices; cause our customers to delayo r cancel orders orn e g atively impact our competitive position; impede ou r ability to purchase materials, including critical materials and minerals, andd isruptrr supplyu chain and logistics. For example, in 2025 the Chinese government implemented ex port controls on thee x port of rare earthm i nerals that ar e used in certaino fo u r products and may implement additional controls in the future. We may take actions to mitigate the impact of increases in tariffsff and changes in trade policies, but therec an be no assurance that we w ill be successful,ff and any sucha ctions could result in additional costs, manufacff turingd elays or oth er difficulties, as wella s additional risks, and may not b e effeff ctive. Anyo r all of these factors mayh a ve a material and adverse impact on our business, financial condition and results of operations. We aree xposxx ed to risks associati edtt withii a highi ly concentratedtt customtt er base. A relatively limited number of customers account for a subsu tantialp ortiono f our business. As a result, the actions of even a singlec u stomer have exposed and can further expose our business ando p erating results to greater volatility. Our customer base is geographically concentrated, particularlyi n China, Taiwan and Korea, and export regulations that apply to customers in certain countries, sucha s those in China, have exposed and can further expose our business ando p erating results to greater volatility. The geographicc o ncentrationo fo u r customer base could shift over time as a result of changes int echnology and competitive landscape,a as wella s government policy and incentives to develop regional semiconductor industries. The mix and type of customers and sales to any singlec ustomer, including as a result of changes in government policy, have va ried and may vary significantly over time and may continue to have a significant impact on our op erating results. Our products are configff ured to customer specifications, and changing, rescheduling or canceling orders may result in significant, non-recoverabla e costs. If customers do not pla ce orders, or they subsu tantially reduce, delayo r cancel orders, we may not b e able to replace the business, which mayh a ve a material and adverse impact on our results of operations and financial condition. Thec o ncentrationo fo u r customer base increases our risks related to the financial condition of our customers, and the deterioration in financial condition of a singlec u stomer or the failure of a singlec u stomer to perform its obligations could have a material and adversee f feff ct on our results of operations and cashf l ow. To the extent our customers experience liquidity constraints, we may incur badd e bt expense, which mayh a ve a significant impact on our results of operations. Majoa r customers may seekp ricing,p a yment, intellectuat l property-related, or other commercial terms that are less favorable to us, which mayh a ve a negative impact on our business, cash flow, revenue and gross margins. Supplpp yc hll ainii disruii ptu iott ns,s manufacff turingii interruptions or delaysa , ors the failure to accurately forecast customtt er demand,dd coulda fll feff ct our abiliii ty to meii et customtt er demand,dd lead to highi er costs, or result in excess or obsoletell inventortt y.r Our business depends on ou r timely sup p l yo fp ru oducd ts and services to meet thec hanging requirements of our customers, which depends in part on the timely deliveryo fp arr rts, materials and services from supplu iers and contract manufactff urtt ers. Volatility i n demand for our p roducdd ts and worldwide demand for semiconductor chips and electronic devices c an impact our supplu iers’ ability to meet our demand requirements and has in the past resulted in a shortageo f parts, materials and services needed to manufacff ture our produc ts. These shortages, as wella s delays in and unp redictabia lity of shipments due to transportation interruptu ions, may adversely impact our manufactff urt ing operations and our ability to m eet customer demand. Supplyu chain constraints may increase costs of logistics andp arts for our products and may cause us to pass on increased costs to our customers, which may lead to reduced demand for our produc ts. Supplyu chaind isruptrr ions have in the past caused, and may fromt ime to time cause, delays in our equipment production andd e liveryrr schedules, which can lead to our business 13
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performance becoming significantly dependent on quarter-end production andd eliveryrr schedules. We may further experience supplyu chaind isruptrr ions, significant interruptu ions of our manufactff urt ing operations, delays in our ability to deliver or install products or services, increased co sts, customer order cancellations or reduced demand for our products as a result of: •g lobalt r ade issues and changes in andu ncertainties with respect to trade and export regulations, trade policies and sanctions, tariffs, internationalt r ade disputes, particularly those relating to exports of certain t echnologies to China, where a significantp ortion of our supplyu chain is located, and any retaliatory measures, that adversely impact us or our direct or sub-u tier supplu iers; • political instability, social unrest, terrorism, acts of war or other geopolitical turmoil in l ocations where we or our customers or supplu iers have operations; •t he failure or inability to accurately forecast demand ando btain quality parts on a cost-effective basis; •c ybersecurityi ncidents affeff cting our supplyu chain; •v olatility in th e availabia lity and cost of parts, commodities, energy and shipping related to our produc ts, including increased costs due to rising inflationo r interest rates or other market conditions, as wella s uncertainties arising from the impositiono f tariffs and any retaliatory measures; •d iffiff culties or delays in obtaining required import or export licenses and approvals; •s hipment delays due to transportation interruptu ions or capaa city constraints; •a worldwide shortageo f semiconductor components as a result of sharprr increases in demand for semiconductor products in general; • limited availability of critical materials and minerals, including du e to Chinese government restrictions on thee x port of certain rare earth minerals implem ented in 2025, which couldb e expanded in the future, and limited feasible alternatives to materialss ubju ect to existing or p roposed regulations to limit their use (sucha s hydrofluff orocarbonsr and per- and polyf luff oroalkylkk subsu tances), which are found in parts, components, process chemicals ando ther materials supplu ied to us or used in the manufactff urt ing or operationso fo u r products; and • impacts of natural disasters, extreme and chronic weather events, regional or globa l health epidemics, or other events beyond our control. If a supplu ierf a ils to meet our requirements concerning qua lity, cost, intellectuatt l property prot ectiono r other performff ance factors, or does not meet regulatory requirements applicable to our supplyu chain, we may transferff our business to alternative sources, which could result in manufactff urt ing delays, a dditional costs or other difficulties, and impair our ability to protect, enforce and extract the full value of our intellectuat l property rights and the intellectuatt l property rights of our customers and other thirdp arties. If we need to rapidlya increase our business and manufactff urt ing capacityt om eet increases in demand or expedited shipment schedules, this may strain our manufactff urt ing and supplyu chain operations andn e g atively impact our working capital. If we are unable to accurately forecast demand for our produc ts, we mayp u rchase more or fewer parts than necessary or incur costs for canceling,p o stponing o r expediting deliveryo fp arr rts. If we purchase or commit t o purchase inventory in anticipationo f customer demand that does not materialize, or the inventory is rendered obsolete by the rapid paa ce of technological change, or if customers reduce, delayo r cancel orders, we may incur excess or obsolete inventory charges. Anyo f these events impa cting our supplyu chain could affeff ct our ability to m eet our customers’ demand, result in higher costs to us and have an adverse effeff ct on customer relationships ando ur business, financial condition and results of operations. We aree x posxx ed to various factortt srr that impactt he industries in which we operate,e includindd g factortt ss prr ecific to the semiconductortt industry.tt The industries in which we operate are characterized by factors that impact demand for and the profitaff bia lity of our products and services and our op erating results. The largest proportiono fo u rn et revenue and profitaff bia lity is derived from our Semiconductor Systemss egment’ss ale of a wide range of equipment used to fabra icate semiconductor chips, and a majoa rity of the revenue of Applied Global Services is from sales to semiconductor manufactff urt ers. The industries in which we operate, including the semiconductor industry,rr arec haracterized by factors particular to these industries that impact demand for and the profitaff bia lity of our produc ts and services, including: •c hanges in demand for semiconductor chips and electronic devices, including those related to fluctuations in consumer buying patterns tied to general economic or geopolitical conditions, seasonality or the introductiono f new products; •t he frequency and complexity of technology transitions and inflections, and our ability to timel y and effeff ctively anticipate and adapt to these changes; 14
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•t he cost of researcha nd deve lopment due to many factors, including shrinking geo metries, the use of new materials, new and more complex device structurt es, more applications and processs teps, increasing chip design costs, and the cost and complexity of integrated manufacff turing processes; •t he need to reduce product development time and meet technical challenges; •t he number of types andv arieties of semiconductors and number of applications; •c apital requirements for building ando p erating new fabra ication plants and customers’ ability to raise the necessary capital; •t rade, regulatory, taxo rg o vernment incentives impacting customers’investment in new or expanded fabra ication plants and semiconductor researcha nd development; •t he cost and complexity for customers to move from product design to volume manufactff urt ing, and the impact on investment in capital equipment; •s emiconductor manufacff turers’ levels of capital expenditures and the allocationo f capitali nvestment to market segments that we do not serve, sucha s lithography, o r segments where our produc ts have lower relative market presence; •d elays in installationo fo u r equipment delivered to customers; •c hanges in growth rates among the semiconductor ando ther industries in which we operate; •t he importance of increasing marketp ositions in segments with growing demand; •m anufactff urt ers’ ability to reconfigff ure and re-use equipment, resulting in diminished need to purchase new equipment and services from us, and challenges in providing parts forr eused equipment; •t he availabia lity of spare parts to maximize the time that customers’ systems are availabla e for production; •s ystem reliability and produc tivity and thee f feff ct on demand for fabra ication systems as a result of their increasing productivity, device yield and reliabia lity; •s horter cycle times between order placements by customers and produc t shipment require greater reliance on forecasting of customer investment, which may lead to inventory write-offs and manufactff urt ing ineffiff ciencies that decrease gross margin; •c ompetitive factors that make it difficult to enhance position, including total cost of manufactff urt ing system ownership ando ther challenges in securingd e velopment-tool-of-record (DTOR) and production-tool-of-record (PTOR) positions with customers; •c onsolidation in the semiconductor industry,rr including among semiconductor manufactff urt ers and among semiconductor equipment supplu iers; •s hifts in sourcing strategies by computer and electronics companies, and manufactff urtt ing processes for advanced circuit technologies, that impact the equipment requirements of our foundry customers; •t he fragmentation of semiconductor markets, leading certain markets to become too small to supporu tt hec ost of a new fabra ication plant, while others require less technologically advanced products; •t he importance of specialty markets (sucha s internet of things, communications, automotive, powera nd sensors) that use process technologies that have a low barrier to entry;rr •t he increasing role for and complexity of software in our products; •t he focus on reducing energy usage a nd improving thee n vironmental impa cta nd sustainability associated with manufactff urt ing operations, and the availabia lityo f adequate and reliabla e sources of energy; and •t he importance of advanced packaging to AI computing. If we do not effeff ctively address these factors, accurately forecast and allocate approp riate resources and investment towards addressingk ey technology changes and inflections, successfulff ly develop and commercialize products to meet demand for new technologies, and effeff ctively address industryrr trends, our bus iness and results of operations mayb e materially and adversely impacted. The industries in which we operate are highi ly competittt ivtt e and subject to rapida technologio cal and market changes. We operate in a highly competitivee n vironment in which innovation is critical, and our future success depends o n many factors, including the development of new technologies, commercialization of our produc ts and services, and our abilityt o increase our po sition in our current markets and expand into adjad cent and new markets. The development, introducdd tion and 15
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supporu t of produc ts in a geographically diverse and competitive environment requires collabora ation with customers ando ther industryp arr rticipants, which has grown more complex and expensive over time. New or improved produc ts may entail higher costs and longer development cycles, and may have unfo reseen product designo r manufactff urt ing defects. To compete successfulff ly, we must: • identifyff and address technology inflections, market changes, competitor innovations, new applications, customer requirements and end-use demand; •d evelopn ew products andd isruptrr ive technologies, improve andd e v elopn ew applications for existing products, and adapt products for use by customers in different applications and markets with varying technical requirements; •c omplete ourn ew Equipment and Process Innovation and Commercialization Centera ndo ther major infrastructuret projects on schedule and on budget, and realize the anticipated benefits of those projects; •d iffereff ntiate our produc ts fromt hose of competitors, meet customers’ performance specifications, and successfulff ly commercialize our products and achieve marketa cceptance; •m aintain operating flexibilityt o enable responses to changing markets, applications and customer requirements; •e nhance our worldwide operations across our businesses to reducec y c le time, enable continuous quality improvement, reducec osts, and enhance design for manufactff urt ability and serviceability; •f ocus on producff t development and sales and marketing strategies that a ddress customers’ high va lue problems and strengthen customer relationships; •e ffectively allocate resources between our existing produc ts and markets, the development of new producd ts, and expanding into new and adjad cent markets; • improve the productivity of capitali nvested in researcha ndd e v elopment activities; •a ccurately forecast demand, work with supplu iers and meet produc tion schedules for our produc ts, improve our manufactff urt ing processes and achieve cost effiff ciencies across product offeriff ngs; and • implement changes in our design engineering methodology to reduce material costs and cycle time and improve product lifeff cycle management. If we do not successfulff ly anticipate technology inflections, develop and commercialize new products and technologies, and respond to changes in customer requirements and market trends, our bus iness performance ando p erating results may b e materially and adversely impacted. We aree xposxx ed to risks related to government incentivtt es and othett r agreements that maya involve government entitiii es. From time to time, we enter into agreements with government entities for grants, tax benefits ando ther incentives, other fundingff related to our investment, researcha ndd e v elopment and production activities or for sale of our produc ts to government entities or gov ernment-funded programs. These agreements typicallyi nclude terms that are not common in similar agreements with non-governmental entities, including representations and warranties, covenants and certifications, and record-keeping, accounting,a udit, intellectual prop erty rights-sharing, information handling, supplyu chain management, headcount, security, disclosure ando ther requirements. These agreements may also require us to achieve or maintain certain l evels of investment, capital spending andp erformance milestones. Compliance with these requirements may add complexityt o our op erations and increase our costs, and a failure to comply could result in cancelationo f agreements or transactions, investigations, civil and criminalp e n alties, forfeiturt e of profitsff , reduction, terminationo r clawback of any funding, suspension or debarment from doing business with the government, or oth er penalties, anyo f which could have a material and adversee f feff ct on our business, financial condition and results of operations. We aree xposxx ed to factortt ss prr ecific to the dispii laya industry. Wea r ea supplu ier to the global display industry,rr which has experienced co nsiderable volatility i n capital e quipment investment levels, due in part to the limited number of display manufactff urt ers, thec o ncentrated nature of end-use applications, production capacity relative to end-use demand, the speed of adopting new technologies andp a nel manufactff urt er profitabia lity. Industry growrr th depends p rimarily on consumer demand for increasingly largera nd more advanced TVs, ando n demand for advanced smartphones and mobile device displays, whichd emand is highly sensitive to cost and improvements in technologies and featurt es. Demand for and the profitaff bia lity of our display produc ts and services is impa cted by the foregoing industryrr factors, as wella s the introduction of and rate of transition to new types of display technologies, our ability to anticipate and adapt to technology transitions and inflections, and thee x pansiono f display manufactff urt ing facilities in China. If we do not successfulff ly develop and commercialize products to meet demand for new and emerging di splay technologies, or if industryrr demand for display fabra ication equipment and technologies does not grow, our bu siness and our op erating results mayb e adversely impacted. 16
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We aree xposxx ed to risks associati edtt withii expandixx ngii into new and related marketstt and industries. As part of our growth strategy, we seek to continue to expand into relatedo rn ew markets and industries, either with our existing products or with new products developed internally, or those developed in collabora ation with thirdp arties, or obtained through a cquisitions. Our ability to successfulff ly expand our bu siness into new and related markets and industries mayb e adversely affeff cted by a number of factors, including: • the need to devote additional resources to developn ew products for, ando perate in, new markets; • the need to developn ew sales and technical marketing strategies and to develop relationships with new customers; • differing rates of profitff ability and growth among multiple businesses; • our ability to anticipate demand, capitalize on opportunities and avoido r minimize risks; • thec o mplexity of managing multiple businesses with variations in production planning, execution, supplyu chain management and logistics; • the adoptiono f new business models, business processes and systems; • thec omplexity of entering into and effeff ctively managing strategic alliances orp artnering opportunities; • the need to attract, motivate and retain employees with skills and expertise in these new areas; • new and more diversec u stomers and supplu iers, including some with limit edo p erating histories, uncertain or limited funding, evolving business models or locations in regions where we do not have, or have limited, operations; • new or different competitors with pot entiallym o re financial or other resources, industryrr experience and establa ished customer relationships; • entryrr into new industries and countries, with differff ing levels of government involvement, laws and regulations, and business, employment and safety practices and requirements; • thirdp arties’intellectuat l property rights; and • the need to comply with, or work to establa ish, industryrr standards andp ractices. We aree xposxx ed to risks related to the use of AI by us ando ur competitott rs. Wea r e increasingly incorporating AI capabilities into the development of technologies, our bus iness operations and our products and services. AI technology is complex and rapidlya evolving and may subju ect us to significant competitive, legal, regulatory, operational ando ther risks. The implementationo f AI can be costly, and there is no guarantee that our use of AI will enhance our technologies, benefit our business operations, or produc e products and services that are preferredb yo u r customers. Our competitors mayb e more successfulff in their AI strategy andd e v elop supeu rior produc ts and services with the aido f AI technology. Additionally, AI algorithms or training methodologies mayb e flawed, andd atasets may contain irrelevant, insufficient or biased information, which can causee r rors in outputs. This may giv e rise to legal lia bia lity, damageo u r reputation, and materially harm our business. The use of AI in the development of our produc ts and services co uld also cause loss of intellectuatt l property, as wella s subju ect us to risks related to intellectuat l property infringement or misappropriation, data privacy and cybersecurity. We also utilize third-party providers of AI capabilities, and our ability to implem ent AI successfulff ly in our business operations relies on our continued access to third-party provid ers and safeguards implemented by them. Additionally, AI technology may also createe thical issues, which could impair marketa doptiono f such technology and impair demand for our products and services. Furthermore, the United States ando ther countries may adopt laws and regulations related to AI. These laws and regulations could cause us to incur greater compliancec o sts and limitt he use of AI in the development of our produc ts and services. Any failure orp erceived failure by us to comply with these regulatory requirements could subju ect us to legal liabia lities, damageo ur reputation, or otherwise have a material and adverse impact on our business. Operational and Financial Risksp We aree xposxx ed to risks related to protecttt iott n and enfon rcement of intellectual propertytt righi ts. Our success depends o n the protectiono fo u r technology us ing patents, trade secrets, copyrights ando ther intellectuat l property rights. Infringement or misappropriationo fo u r intellectuat l property rights, sucha s the manufactff urtt e or sale of equipment or spare parts that use our technology withouta uthorization, could result in uncompensated lost market and revenue opportunities. Detecting andp reventing misuse of our intellectual property is difficult and costly, and we cannot be certain that our protective measures will be successful.ff Our ability to enforce our intellectuat l property rights is subju ect to litigation risks and uncertainty as to the protection and enforceability of those rights in some countries. Enforcement effortff s mayb e subju ect to claims that our rights are invalido r unenforceable and may result in counterclaims against us, which could have a negative impact on our business. If we are unable to enforce and protect intellectuat l property rights, or if they are circumvented, rendered obsolete, invalidated by the rapia dp a ce of technological change, o r stolen or misappropriatedb y employees or thirdp a rties, it 17
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could have an a dverse impact on our competitivep o sition and bus iness. Changes ini n t ellectuat l property laws or their interpretation may impact our ability to prot ecta nd assert our intellectuat l property rights, increase costs andu ncertainties in the prosecution of patent applications or related enforcement actions andd iminish the value and competitive advantage co nferff red by our intellectuat l property assets. From time to time thirdp arties have asserted, and may continue to assert, intellectuatt l property claims against us and our products. Claims that our produc ts infringe the rights of others, whether orn ot meritorious, can be expensive and time- consuming to defend and resolve, and mayd i vert thee ffortff s and attentiono f management andp ersonnel. The inability to obtain rights to use third-party intellectuatt l propertyo n commercially reasonable terms could have an adverse impact on our business. We may face c laims basedo n the theftff or unauthorized use or disclosure of third-party trade secrets ando ther confidff ential business information. Anyo f these incidents and claims could severely harm our business and reputation, result in significant expenses, harm our competitive position, andp revent us from selling certain products, all of which could have a material and adverse impact on our business and results of operations. We aree xposxx ed to cyberserr curityii threatstt and incidents.tt In thec o nduct of our business, we collect, use, transmit, store ando therwise process data using information technology systems, including systems owned and maintained by us or ou r third-party provid ers. These data include confidff ential information and intellectuat l property belonging to us o r our customers or other business partners, andp ersonal informationo f individuals. All information technology systems are subju ect to disruptrr ions, outages, failures and security breaches or incidents, which mayb e caused by a variety o f internal and external factors. Wea nd our third-party provid ers have experienced, and expect to continue to experience, cybersecurity incidents. Cybersecurityi ncidents may range from physical attacks on our computer system orn etwork infrastructurt e, to employee or contractor error or misuse or unauthorized use of information technology systems or confidff entiali nformation, to individual attempts to gain unauthorized access to these information systems, to sophisticated cybersecurity attacks, or advanced persistent threats, anyo f which may target or impact us directly or indirectlyt h rough ou r third-party provid ers and globa l supplyu chain. Threat a ctors may also attempt to i nfluence employees, supplu iers ando ther third-party providers, or customers to disclose sensitive information to gain access to our, our customers’or business partners’ data. Cybersecurity attacks are increasing in number and the attackers are increasingly organiz ed and well- financed, or at timess upporu tedb y state actors. Geopolitical tensions or conflictsff , sucha s Russia’s invasion of Ukraine, tension with China and confliff ct in the Middle East may create a heightened risk of cybersecurity attacks. The techniques used by threat actors to identify vulneff rabia lities and craftff cybersecurity attacks change frequently and may increasingly involve the use of new technologies, including AI and quantum computing. AI andd eepfake technologies couldb eu s ed to attack information systems by creating more effeff ctive phishing emails or social engineering andb y exploiting vulnerabia lities in electronic security programs utilizing false image or voi ce recognition. Vulnerabilities, technical errors ando ther risks mayb e introduced through the use of AI by us, ou r customers, supplu iers ando ther business partners and third-party providers, or through the use of third- partyh a rdware and software. Advances in quantum computing have the potential t o underminec u rrent encryptrr ion standards and may allow threat a ctors to circumvent existing protective measures. Although we are nota ware of any cybersecurity incidents impacting our information systems that have been determined to have a material impact on us to date, we continue to devote significant resources to network security, data encryprr tion ando ther measures to protect our systems andd ata from unauthorized access or misuse, and we mayb e required to expend g reater resources in the future. We may be unabl e to anticipate, prevent or remediate future incidents, and in some instances, we may be una ware of incidents or their magnitude and effeff cts, particularly as attackers are increasingly able to circumvent controls and remove forensic evidence. Cybersecurity incidents, including incidents on third-party provider networks, may result in business disruptrr ion; delay in the development and delivery of our producrr ts; disruptrr iono fo u r manufacff turing processes, internal communications, interactions with customers and supplu iers and proc essing and reporting financial results; the theftff or misappropriationo f intellectuat l property; corruprr tion, loss of, or inability to a ccess (e.g., through ransomware or denial of service) confidff entiali nformation and critical data (i.e., that of our company and our third-party provid ers and customers); reputational damage; privatec laims, demands, and litigation or regulatory investigations, enforcement actions, or other proceedings related to contractuat l or regulatory privacy, cybersecurity, data protectiono r other confidff entiality obligations; diminution in the value of our investment in research, development and engineering; and increased costs associated with the implementationo f cybersecuritym easures to detect, deter, protect against and recoverf rom these incidents. Our effortff s to comply with and changes to laws, regulations and contractuat l ando ther actual and asserted obligations concerning p rivacy, cybersecurity andd ata protection, including dev eloping restrictions on cross- border data transfer anff dd ata localization, could result in significant expense, and any actuat l or alleged failure to comply could result in i nquiries, investigations ando ther proceedings against usb y regulatory authorities or other thirdp a rties. Customers and third-party providers increasingly demand rigorous contractuat l provisions regarding privacy, cybersecurity, data protection, confidff entiality and intellectuat l property, which may increase our overall compliance burden. 18
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We aree xposxx ed to risks associati edtt withii busineii ss combinatiott ns,a c q us isitions,s strategie c investmentstt andd ivestituii res. We may engage in acquisitions of or investments in companies, technologies or produc ts in existing, relatedo rn ew markets. Business combinations, acquisitions and investments involve numerous risks to our business, financial condition and operating results, including: • inability to complete proposed transactions timely o r at all due to the failure to obtain regulatory or oth er approvals, including through expanding globa l national security regimes that impose prohibitions on foreign investments in or acquisitions of local businesses; litigationo r other disputes, and any ensuing obligation to pay a termination fee; • diversiono f management’s attention andd isruptrr ion of ongoing businesses; • the failure to realizee x pected revenues, gross ando p erating margins, net income ando ther returns from acquired businesses; • requirements imposed by gov ernment regulators in connection with their review of a transaction, including pos t- closing investigations of non-notified transactions, which may include, among oth er things, div estiturt es and restrictions on thec onduct of our existing business or the acquired business; • following completion of acquisitions, ineffeff ctive integrationo f businesses, operations, systems, digital and phys ical security, technologies, products, employees, compliance programs, changes inl aws or regulations, including tax laws, or otherf actors, may impact the ability to realize anticipated synergies or other benefits; • failure to commercialize technologies from acquired businesses or developed through strategic investments; • dependence on unfamff iliar supplyu chains or relatively small supply pau rtners; • inability to capia talize on characteristics of new markets that mayb e significantly different from our existing markets and wherec ompetitors mayh a ve stronger marketp ositions and customer relationships; • failure to retain and motivate key employees of acquired businesses; • the impact of the announcement or consummation of a proposed transactiono n relationships with thirdp arties; • changes in our credit rating, which could adversely impact our access to and cost of capital; • increases in debt obligations to finance activities associated with a transaction, which increase interest expense, and reductions in cash balances, which reduce the availabia lityo f cash flow for general corporate or other purposes, including share repurchases and dividends; • exposure to new operational risks, rules, regulations, worker expectations, customs andp ractices to thee xtent acquired businesses are located in regions where we have noth istorically conducted business; • challenges associated with managing new, more diverse and more widespread operations, projects and people; • inability to obtain and protect intellectuat l property rights in key technologies; • inadequacy or ineffeff ctiveness of an acquired company’s internalf inancial controls, disclosure controls and procedurd es, cybersecurity, privacy policies and compliance programs, trade co ntrol processes or prog rams, or environmental, health and safety, anti-corruptu ion, human resource or other policies orp ractices; • impairment of acquired intangible assets and goodw ill as a result of changing bu siness conditions, technological advancements or worse-than-expected performance of the segment; •t he risk of litigation, government enforcement actions or claims associated with a proposed or completed transaction; •u nknown, underestimated, undisclosedo r undetected commitments or liabia lities, including pot ential intellectualt property infringement claims, or non-compliance withl aws, regulationso rp o licies; and • the inappropriate scale of acquired entities’critical resources or facilities for business needs. We make investments in other companies, including companies formed as joint ventures, which mayd ecline in value or not meet desired objectives. The success of these investments depends on va rious factors over which we mayh a ve limitedo rn o control and, pa rticularly with respect to joint ventures, requires ongoing and effeff ctivec o operation withp a rtners. In addition, new legislation, additional regulationso rg l o b al economic or pol itical conditions may affeff ct or impair our ability to invest in certain countries or require us to obtain regulatory approvals to do so. We may not receive the necessaryr egulatory approvals, or the approvals may come with significant conditionso r obligations. The risks to our investmentp ortfolff io may be exacerbar ted by unfavff orable financial market and macroeconomic conditions, and as a result, the value of the investmentp ortfolff io couldb e negatively impacted and lead to impairment charges. We may seek to divestp o rtionso f our business that are not deemed to fit with our strategic plan. Divestiturt es involve additional risks andu ncertainties, sucha s our ability to sell these businesses at a price ando n terms that are satisfactory and in a 19
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timely ma nner or at all, disruptrr ion to other parts of the businesses andd istractiono f management, allocationo f internal resources that wouldo therwise be devo ted to completing strategic acquisitions o r other strategic projects or initiatives, loss of key employees or customers, loss of access by retained business units to critical intellectuat l propertyo ro t her assets transferff red with the divested business, exposure to unanticipated liabia lities or ongoing obligations to supporu tt he businesses following these divestitures ando ther adverse financial impacts. The ability toii attrtt act, retain and motivatett keye me ploym ees is vital toii our success. Our success depends inl arge part on our ability to attract, retain and motivate qualified employees and leaders with the necessary expertise and capabilities, representing diverse backgrounds and experiences. Achieving this objective mayb e difficult due to many factors, including fluctuations in global economic and industryrr conditions, management or organiz ational changes, ongoing competition for talent, the availabia lityo f qualified employees, the ability to obtain necessary authorizations for workers to provide services outside their home countries, challenges in hiring and integrating workers in different countries, the attractiveness of our compensation andb e nefit programs, our career growth andd e v elopment opportunities and our employment policies. If we are unable to attract, retain and motivate qualified employees and leaders, we may be unable to fully capitalize on current and new market opportunities, which could adversely impact our business and results of operations. The loss ofk n owledgeable and experienced em ployees may result in unexpected co sts, reduced productivity or difficulties with respect to internal processes and controls. We operate in jurisdictiodd ns withii complexa ndee changingii taxaa laws. Wea r e subju ect to income taxes in the United States and foreign jurisdictions. Significant judgment is required to determine and estimate worldwide tax liabia lities. Our provision for income taxes and effeff ctive tax rates couldb e affeff cted by numerous factors, including changes in applicable tax laws, interpretations of applicable tax laws, amount and compositiono f pre-tax incomei nj urisdictions with differing tax rates andv aluationo f deferred tax assets. There have be en a number of enacted and propo sed changes in the tax laws that could have a material impact on our provision for income taxes and effeff ctive tax rate. An increase in our provision for income taxes and effeff ctive tax rate could, in turn, have a material and adverse impact on our results of operations and financial condition. For example, various countries where we do bus iness have enactedo rp l an to enact new tax laws to implement the global minimumt a x regimes basedo n the Organization for Economic Cooperation and Development Base Erosion and Profitff Shifting Project, and wheree nacted, the rules began to be effeff ctive in fiscal 2025 . Additionally, o n July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (OBBBA). Key tax provi sionso f the OBBBA are designed to accelerate tax deductions, but that mayh a ve a detrimental impact on our ability to use cer tain deferred tax assets. For example, as a result of the accelerationo f certain tax deductions under the OBBBA, we are unable to forecast utilizationo fo u r existing corporate alternative minimum tax (CAMT) credit deferred tax asset. We have recorded a full valuation allowancea g a instt he CAMT credit deferred tax asset, which increased our effeff ctive tax rate and provi sion for income taxes in fiscal 2025 . The amount of the valuation allowance mayb e adjud sted in future quarters if estimates of our future taxable income change. Wec ontinue to monitor developments and evaluate the impact, if any, o f enacted andp roposed c hanges in the tax laws on our results of operations and cash flows. The adoption and effeff ctive dates of changes in the tax laws vary by country and could increase tax complexity andu ncertainty and may adversely affeff ct our provision for income taxes in future years. We have been granted additional conditional reduced tax rates in Singapore that expire beginning in fiscal 2030. There is risk our conditional reduced tax rates may not be renewed. Consistent with the international nature of our business, we conduct certain m anufactff urt ing, supplyu chain ando ther operations in Asia, bringing these activities closer to customers and reducing operating costs. In some foreign jurisdictions, we must meet certain requirements to continue to qualifyff for tax incentives. There is no assurance we w ill be able to meet such requirements in the future to fully realize benefits from these incentives. Furthermore, the proposed plans to implement globa l minimumt ax regimes could reduce or eliminate the benefits of our tax incentives. Wea r e subju ect to examination by the U.S. InternalR evenue Service ando ther tax authorities, and from time to time amendp reviously filed tax returns. We regularly assess the likelihood o f favorable or unf avff orable outcomes resulting from these examinations and amendments to determine the adequacy of our provi sion for income taxes, which requires estimates and judgments. Although we believe our tax estimates are reasonable, therec an be no assurance the tax authorities willa gree with such estimates. We mayh a ve to engage in liti gation to achieve the results reflected in thee s timates, which mayb e time- consuming and expensive. Therec an be no assurance that we w ill be successful orff that any final determination will not be materially different from the treatment reflected in ourh istorical income tax provisions and effeff ctive tax rates. Our indebtedtt nedd ss andd e b tcovenantstt couldll adverserr ly affeff ct our financii ial conditiodd n andb usineii ss. As of October 26, 2025, we had $6.5 bi llion in aggregate principal amount of senior unsecured notes outstanding. Under the indenture governing the senior unsecured notes, we mayb e required to offerff to repurchase the notes at a p ricee qual to 20
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101% of the principal amount, plu s accruedrr and unpa id interest, if we experience a changeo f control and a contemporaneous downgrade of the notes below investmentg rade. We also have in place revolving credit facilities that allow us to borrow up to an a ggregate amount of approximately $4.1 bi llion. While no amounts were outstanding und er these c redit facilities as of October 26, 2025, we mayb orrow amounts in the future under these credit facilities or enter into new financing arrangements. Our ability to satisfy our debt obligations is dependent upo n the results of our business operations and subju ect to other risks discussed int h is section. If we failt o satisfy our debt obligations, or comply withf i nancial ando ther debt covenants, we may be in default and anyb o rrowings mayb ecome immediately due and payable , and such default may constitute a default under our other obligations. There canb e no assurance that we wo uld have sufficient financial resources or be able to arrange financing to repay anyb o rrowings at such time. Significant changes in our credit rating,d i sruptrr ions in the global financial markets, or incurrence of new or refinancing of existing indebtedness at higher interest rates could have a material and adverse impact on our access to and cost of capital for future financings and our financial condition. Our busineii ss dependsdd on the successfulff implementattt iott n and proper functioning of infon rmatiott n systemtt s we use. Our business depends o n certaini nformation systems, including, enterprise resource planning, produc t research and development, financial reporting, information technology network management and telecommunications. These systems mayb e maintained by us or by ou r third-party vendo rs. Failures of these systems couldd isrupt our operr rations, impede our ability to timely and accurately process and report financial results, and adversely impact our business, financial condition and results of operations. We periodically implementn ew or enhanced information systems. Implementationo f new business processes and information systems requires thec ommitment of significantp ersonnel, training and financial resources, and entails risks to our business operations. If the implementationo r improvement of information systems is delayed or unsuc cessful,ff we may not realize anticipated productivity imp rovements or cost effiff ciencies and may experience interruptu ions in service ando p erational difficulties, which could result in quality i ssues, reputational harm, lost marketa nd revenue oppo rtunities ando therwise adversely affeff ct our business, financial condition and results of operations. We maya incur impairmi ent charges related to goodwillll or long-lgg ivll ed assets. We have a significant amount of goodw ill ando ther acquired intangible assets related to acquisitions. Goodwill and purchased intangible assets with indefinite usefulff lives are not amortized buta r e reviewed for impairment annually du ring the fourth quarter of eachf iscaly ear and more frequently when events or changes in circumstances indicate thec arrying value of an asset may not b e recoverabla e. The review compares the fair value for each of our reporting units to its associated carryingv alue, including goodw ill. Factors that could lead to impairment of goodw ill and intangible assets include adverse industryo rrr economic trends, reduced estimates of future cash flows, declines in the marketp rice of our common stock, changes in our strategies or produc t portfolff io and restructurt ing activities. Our valuation methodology for assessing impairment requires management to make judgments and assumptionsb asedo nh i storical experience and proj ections of future operating performance. We have recorded charges to earnings, and may in the future be required to record charges to earnings, when impairments of goodwill or intangible assets have been determined to exist. We maya not contintt ue to declarll ec ash dividendsdd or repuee rchase our shares. Our ability to continue to pay qua rterly dividends and to repurchase our shares is subju ect to capitala vailabia lity and periodic determinationsb yo u r Boardo fD i rectors that cashd ividends and share repurchases are in the best interest of our stockholders and are in compliance with appl icable laws and agreements. Future dividends and share repurchases mayb e affeff cted by, among oth erf a ctors, our cash flow; potential future capital requirements for investments, acquisitions, infrastructurt e projects and researcha ndd e v elopment; changes in applicable tax, corporate, or other laws; contractuat l restrictions, sucha s financial or operating covenants in our debt arrangements; and changes to our business model. Our dividend payments and share repurchases may change from time to time, and we cannot provide assurance that we will continue to declare dividends or repurchase shares in anyp a rticular amounts or at all. A reductiono r suspension in our dividend payments or share repurchases could have a negative effeff ct on the price of our common stock. Legal, Compliance and Other Risksg, p We aree xposxx ed to risks related to legal proce eedingii s,gg claill msii and investigatiott ns. From time to time we are, and in the future mayb e , involved inl egal proceedingso r claims regarding patent infringement, trade secret misappropriation, other intellectuatt l property rights, trade co mpliance, including import, export and customs, antitrusrr t, anti-corruptu ion, compliance with government contracting requirements, environmental regulations, cybersecurity, privacy, da ta protection, securities, contracts, product performance, product lia bia lity, unf aiff r competition, employment, workplkk ace safety ando ther matters. We may receive, and have received, inquiries, warrants, subpoenau s, ando ther requests for information in connection with government investigationso f potential or suspected violations of law or regulations by ou r companyo ro u r employees. For example, we have received subpoenau s from government authorities requesting 21
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information relating to China customer shipments, export controls compliance, certain federal award applications and information submu itted to the federal government. We also on occasion receive notifications from customers whob e lieve we owe them indemnificff ation, produc t warranty o r have o ther obligations related to claims made against such customers by third parties. Legal proceedings, claims and government investigations, whether with or without merit, and internal investigations, may be time-consuming and expensive to prosecute, defend or conduct; divert management’s attention ando u r other resources; constrain our ability to sell our products and services; result in adverse judgments for damages, injunctive relief, penalties and fines; andn e g atively affeff ct our business. Wec a nnotp redict the outcome of current or future legal proceedings, claims or investigations. We aree xposxx ed to risks related to the global regue latory enviroii nment. Wea re subju ect to the laws of the United States and multiple foreign jurisdictions and the rules and regulations of v arious governing bodies, including those related to financial ando ther disclosures, accounting standards, securities, corporate governance, public procurement and publ ic funding, intellectuat l property, tax, trade (including import, export and customs regulations), antitrust, cybersecurity, environment, health and safety, employment, immi gration and travel regulations, human rights, privacy, da ta protection and localization and anti-corruptu ion. Changing, inconsistent or conflictinff g laws, rules and regulations, and ambiguities in their interpretation and application create uncertainty and challenges, and compliance mayb e onerous and expensive, divert management time and attention ando therwise adversely impact our business operations. Violations of these law, rules and regulations could result in fines, criminalp e n alties, restrictions on our business, andd amage to our reputation, and could have an adverse impact on our business operations, financial condition and results of operations. Implm emenll tation and reporee tingii on our sustaitt naii biliii tyii stratt tegie es and targetstt couldll result i n additioii nal costs, ando u r inability toii achieve them couldll have an adverserr impact on our repuee tation and perforff marr nce. We periodically communicate our strategies and targets related to sustainability matters. These strategies and targets, and their underlying assumptions, reflect our currentp l ans and aspirations, and we may be unabl e to achieve them. Changing customera nd shareholder sustainability expectations, including increasing customer demand for sustainable products, and regulatory requirements, as wella s actions taken to achieve our sustainability ta rgets, could cause us to incur subsu tantial expense and alter our manufacff turing, operations or equipment designs and processes. Any failure orp erceived failure to timely meet these sustainability requirements, expectations or targets, or a failure to realize the anticipated benefits ofp l anned investments and technology innovations related to sustainability, could adversely impact the demand for our p roducd ts and subju ect us to significant costs and liabia lities and reputational risks that could int urn adversely affeff ct our business, financial condition and results of operations. In addition, standards and processes for measuring and reporting greenhouse gas emissions ando ther sustainabilitym etrics may changeo v er time and may result in i nconsistent data, increase our costs, result in significant revisions to our strategies and targets or impact our ability to a chieve them. Wea l so are or mayb ecome subju ect to new climate and sustainabilityl a ws and regulations, sucha s the State of Californiff a’s climate changed i sclosure rules, the European Union’s Corporate Sustainability Reporting Directive and International Sustainability Standards Board standards. Compliance with such laws and regulations, as wella s increased scrutiny from regulators, customers ando ther stakeholders on our sustainabilityp ractices, could result in additional costs and expose us to new risks. Any scrutinyo f our greenhouse gas emissionso r other sustainabilityd i sclosures, our failure to achieve related strategies and targets, or our failure to disclose our sustainability measures c onsistent with appl icable laws and regulations or to the satisfactiono f regulators or our stakeholders could negatively impact our reputation or performance. We are subjectt o risks associati edtt withii enviroii nmental, healthll and safea ty regue lations. Wea r e subju ect to environmental, health and safety regulations in connection with our globa l business operations, including but not limited to: regulations related to the design, manufactff urt e, sale, shipping, import, export andu s e of our products; use, handling, di scharge, recycling, transportation andd isposal ofh a zardous materials used in our p roducd ts or in producing our produc ts; the operationo fo u r facilities; and the use of our real prop erty, including in connection with construcrr tiono fo u r infrastructurt e projects. The failure or inability to comply with existing or future environmental, health and safety regulations could result in: significant remediationo r other legal lia bia lities; the imposition of penalties and fines; restrictions on the development, manufactff urt e, sale, shipping, import, export or use of certain of our produc ts; limitations on the operationo fo u r facilities or ability to use our realp roperty; and a decrease in the value of our real prop erty. Wec o uldb e required to alter our product design, manufactff urtt ing ando perations and incur subsu tantial expense to comply with environmental, health and safety regulations, including reporting requirements. Any failure to comply with these regulations could subju ect us to significant costs and liabia lities that could materially and adversely affeff ct our business, financial condition and results of operations. 22
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Item 1B: Unresolved Staftt fff Comments None. Item 1C: Cybersecurityii RiskM anagement andS trategy We have implemented processes for assessing, identifying and managing material risks from cybersecurity threats as part of our cybersecurity risk management prog ram. This program includes processes for continuous cybersecurity risk and advanced persistent cybersecurityt h reat monitoring; cybersecurity attack, vulnerabia lity and cloud securitym a nagement; and penetration testing. Our cybersecurity risk managementp rogram includes ac ybersecurityi ncident response plan and escalation protocols; cybersecurity andd ata protection policies and training to our employees; a supplyu chain cybersecurity program to increase awareness, assess su pplu ier security controls, help improve supplu ier security controls and manage security incidents; a program to protect company, customera nd supplu ier intellectuat l propertyb yo p erationalizing strategy, pol icy and awareness; a privacy a ndd ata protection pro gram to keep pa ce with rapidlya evolving globa l data laws and regulations as wella s emerging technologies; engagement of third-party auditors to helpa ssure thee f feff ctiveness of internal controls, including cybersecurity controls; andp a rtnership withi ndustry groups, goverr rnment agencies a nd third-party experts in an ef fortff to continuously improve our cybersecurity risk management program. We conduct assessments basedo n the National Institute of Standards and Technology Cybersecurity (NIST) Framework to evaluate our prog ram, and we engage third-parties for assistance and to independently assess, proactively monitor and provid e an external view of our cybersecurity program. We conduct risk assessments and tabla etop exercises to evaluate the effeff ctiveness of our systems and proc esses in addressing cybersecurity threats, including threats associated with our use of third-party service providers, and to identifyff areas for improvements. Our cybersecurity risk management prog ram is integrated with our enterprise risk management (ERM) program, and information about cybersecurity risks and our cybersecurity risk management prog ram is reviewed as part of our ERM p rogram, sharing common risk governance and reporting processes that apply across our ERM program. While we are nota ware of having di rectly experienced ac ybersecurity incident that has materially impacted our business, financial conditiono r results of operations, we face risks from cybersecurityt h reats that, if realized, could reasonably likely materially affeff ct us, our bu sinesss trategy, results of operations, or financial condition. See “Risk Factorsrr - Operational and Financial Risksii – We are exposx ed to cyberserr curity thr eatstt and incidents”tt for additional information about cyberserr curity related risks. Governance Our Boardo fD i rectors is responsible for overseeing the assessment of major risks facing us, and its Audit Committee oversees our ERM program, including oversight of cybersecurity risks ando f our cybersecurity risk managementp rogram. The Audit Committee receives quarterly reports from management on our cybersecurity risks and cybersecurity risk management program, and our management regularly updates the Chair of the Audit Committee regarding cybersecurityi ncidents where appropriate in accordance with our cybersecurity incident response plan and escalation protocols. The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity, and management reports to the full Board on our cybersecurity risks and cybersecurity risk management program at least annually. Our managementh as day-to-day responsibility for assessing and managing material risks from cybersecurity threats, including implementing risk mitigation plans, processes and controls, and managing ou r cybersecurity risk management program. Our Chief Information Security Offiff cer( CISO), who has extensivee x perience in cybersecurity and information securitym a nagement, is primarily responsible for managing ou r cybersecurity risk management prog ram, cybersecurity incident response plan and escalation protocols, and reports at least quarterlyt ot h e Audit Committee and at least annually to the full Boardo n our cybersecurity, data and intellectuatt l property security programs, policies, risks and controls. The CISO reports to our Chief Information Offiff cer, who is responsible for administering secure and scalable securityi nfrastructure and reports to our Chief Digital Offiff cer, each of whomh as extensive experience ini nformation technology. Our management team’s effortff s to prevent, detect, mitigate and remediate cybersecurity risks and incidents are informed by reviews with our information technology securityt eams, receipt of threat intelligence ando ther informationo b tained from governmental, public orp rivate sources, including external consultants engaged by us, p eriodic assessments againstt he NIST Framework and through alerts and reports produced by securityt ools deployed in our information technology environment. 23
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Item 2: Propertiestt We own and lease facilities throughout the world for use as offiff ces, manufactff urtt ing facilities, warehouses, and research andd e v elopment centers, primarily in th e United States, Singapore, Taiwan, Israel, China, and India. As of October 26, 2025, we owned and leased approxia mately 9.1 million square feet and 5.3 million square feet of space, respectively. Our headquarters are in Santa Clara, California. Our products are manufactff urt ed primarilyi nt h e United States, Singapore, Taiwan and Israel. Because of the interrelationo f our operations, properties within a country mayb e shared by the segments operating within that country. Wea lso own a total of approximately 279 acres of buildable landp rimarilyi nt h e United States that could accommodate additional facilities. Wec o nsider the properties that we own or lease as adequate to meet our current and future requirements. We regularly assess the size, capability and location of our globa l infrastructurt e andp eriodicallym a ke adjud stments basedo n these assessments. 24
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Item 3: Legale Proceedingsii The information set forthu nder “Legal Matters” in Note 14 of Notes to Consolidated Financial Statements is incorporated herein by reference. See alsoll “Risk Factorsrr – Legal,e Compliance and Othett r Risks –ii We are exposed to risks related to legale proceedings, claims and investigati ions.” Item 4: Mineii Safea ty Discii losures None. 25
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PARTI I Item 5: Market for Regie straii nt’sCommon Equityii ,yy Related Stockholdett rM attertt srr and Issuer Purchases of Equityii Securitiii es Market Information Our common stock is traded on the Nasdaq Global SelectM arket under the symbol AMAT. As of December 5, 2025, there were 2,626 registered holders of our common stock. Information regarding quarterly cashd ividends de clared on our common stock during fiscal 2025 , 2024 and 2023 mayb e foundu nder “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition, Liquidity and Capia talR esources”. Perforff mance Graph The performance graphb e low shows the five-year cumulative total stockholder return on our common stock during the period from October 25, 2020 through October 26, 2025. This is compared with thec u mulative total return of the Standard & Poor’s 500 Stock Index and the PHLX Semiconductor Index over the same period. Thec omparison assumes $100 was invested on October 25, 2020 in our common stock and in eacho f the foregoing indices and assumes reinvestment of dividends , if any. Dollar amounts in the graph are rounded to the nearest whole dollar. The performance shown in the graph represents past performance and should not be considered an indicationo f future performance. The graphb elow assumes that the value of the investment in our common stock and in each of the indexes was $100 at October 25, 2020, and that all dividends were reinvested. Copyright© 2025 Standard & Poor’s, a division of S&P global. All rights reserved. 10/25/2020 10 /31/2021 10 /30/2022 10 /29/2023 10 /27/2024 10 /26/2025 Applied Materials 100.00 226.06 149.67 221.11 316.48 392.0 9 S&P 500 Index 100.00 134.88 116.04 124.53 178.22 211.1 2 PHLX Semiconductor Index 100.00 148.13 105.92 142.27 232.14 313.5 3 26 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 10/25/2020 10/ 31/2021 10/ 30/2022 10/ 29/2023 10/ 27/2024 10/ 26/2025 Applied Materials, Inc. S&P 500 PHLX Semiconductor COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Applied Materials, Inc., the S&P 500 Index, anandd ththee PHPHLXLX SeSemimicocondnducuctotorr InIndexdex
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Issuer Purchases of Equity Securities In March 2025, our Boardo fD i rectors approved a common stock repurchase program a uthorizing $10.0 bi llion in repurchases, which supplu emented the previous $10.0 bi llion authorization approved in March 2023. At October 26, 2025, approximately $14.0 billion remained availabla e for future stock repurchases under the repurchase program. The following tabla e provides information as of October 26, 2025 with respect to the shares of common stock repurchased by us du ring the fourth quarter of fiscal 2025 pursuant to the foregoing Board authorization. Period Total Number of Shares Purchased Average Price Paid per Share* Aggregate Price Paid* Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Dollar Value of Shares That May Yet be Purchased Under the Programs* (In millions, except per share amounts) Month #1 (July 28, 2025 to August 24, 2025) 3.0 $ 170.20 $ 503 3.0 $ 14 ,329 Month #2 (August 25, 2025 to September 21, 2025) 1.6 $ 163.59 25 4 1.6 $ 14 ,075 Month #3 (September 22, 2025 to October 26, 2025) 0.4 $ 217.41 9 9 0.4 $ 13 ,976 Total 5.0 $ 172.46 $ 85 6 5.0 *Amounts include the 1% surcharge on stock repurchases under the Inflation Reduction Act’s excise tax. This excise tax is recorded in equity and reduces the amount availabla e under the repurchase program, as applicable. Item 6: [Reserved] 27
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Item 7: Managea ment’sDiscii ussion and Analysll is of Financii ial Conditdd iott n and Results of Operatiott ns Introduction Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to facilitate an understanding of our bu siness and results of operations. This MD&A shouldb e read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this Form 10-K. The following discussion contains forward-looking statements and should also be read in conjunction with the cautionary statement set forth at the beginning of this Form 10-K. The following section generally discusses 2025 and 2024 items andy ear-to-year comparisonsb e tween 2025 and 2024. Discussionso f 2024 items andy ear-to-year comparisonsb etween 2024 and 2023 that are not included int h is Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in PartI I , Item 7o f our Annual Report on Form 10-K for the fiscaly ear ended October 27, 2024, filedo n December 13, 2024. Overview We provide equipment, services and software to the semiconductor and related industries. Our customers include manufactff urt ers of semiconductor wafers and chips ando ther electronic devices. Our customers’ products are used in a wide variety of produc ts sucha s personal computing devices, mobile phones, artificial intelli gence (AI) andd ata center servers, automobiles, connected devices, industrial appl ications and consumer electronics. Each of our segments is subju ect to variable industryrr conditions, as demand for equipment and services can change depending o n supplyu andd e mand for chips ando ther electronic devices, as wella s otherf actors, sucha s global economic, political and market conditions, and the nature and timing of technological advances in fabra ication processes. Our strategic priorities include deve loping produc ts that help solvec u stomers’ challenges at technology inflections, growing our service business, and expanding ou r served market opportunities in the semiconductor industry.rr Our long-term growth strategy requires continued deve lopment of new materials engineering capabilities, including produc ts andp l atforms that enable expansion into new and adjad cent markets. Our significant investments in research, development and engineering (RD&E) are intended to enable us to deliver new producd ts and technologies before thee mergence of strongd emand, allowing customers to incorporate these products into their manufacff turing plans during early-stage technology selection. Wec ollaborate closely with our global customers to design systems and processes to meet their technical and production requirements. Ourf u ture operating results depend to a considerable extent on our ability to maintai n a competitive advantage in the equipment and service products we provide. Development cycles depend o n whether the product is an enhancement of an existing product, which typically has a shorter development cycle, or a new product, which typically has a longer development cycle. Most of our existing products resulted from internal development activities and innovations involving new technologies, materials and proc esses. In certain instances, we acquire technologies, either in existing or n ew product areas, to complement our existing technology capabia lities and to reduce time to market. Product development and manufactff urtt ing activities occur primarilyi nt h e United States, Europe, Israel, and Asia. Our portfolff io of equipment and service products are highly technical and are sold primarilyt hrough a direct sales force. We believe that it is critical to make subsu tantiali nvestments in RD&Et oa ssure the availabia lity of innovative technology that meets the current and projected requirements of our customers’mosta dvanced designs. We have and continue to invest in RD&Ei n order to continue to offerff new products and technologies. We operate in two reportabla e segments: Semiconductor Systems and Applied Global Services® (AGS). As of October 26, 2025, managementn o longer considers Display a significanto p erating segment for separate reporting purposes. The financial results of our other operating segments that do not meet the requirements for a reportabla e segment, including ou r Display operating segment, are included in Corporate and Other. Prior-year Corporate and Other balances have be en recast to include Display financial results. A summary of financiali nformation for each reportabla e segment is found in Note 15 of Notes to Consolidated Financial Statements. A discussion of factors that could affeff ct our operations is set forthu nder “Risk Factors” in PartI , Item 1A, which is incorporated herein by reference. Our results are driven primarily b y customer spending o n capitale quipment and services to supporu t key technology transitions or to increase productionv olume in response to worldwide demand for semiconductors. 28
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The Semiconductor Systemss egment is comprisedp rimarily of capitale quipment used to fabra icate semiconductor chips. Spending b y semiconductor customers, which include companies that operate in th e foundry, logic, memory, ando ther semiconductor chipm arkets, is driven by demand for products sucha s smartphones, mobile devices, personal computers (PC), servers for artificial intelligence (AI) andd ata centers, automobiles, clean energy, storage, a ndo ther products, and the nature and timingo f technological advances in fabra ication processes. The growth of data and emerging end-market drivers sucha s AI, the internet of things, robotics and smart vehicles are also creating the next waveo f growth for the industry.rr As a result, products within the Semiconductor Systemss e gment are subju ect to significant changes in customer requirements, including transitions to smaller dimensions, increasingly complex chipa r chitecturt es, new materials and an increasing number of applications. Spending can also depend o n customer facility readiness and timeline for installationo f capitale quipment at customer sites. Development effortff s are focusedo n solving customers’ key technical challenges in patterning, transistor, interconnect, process control, andp ackaging performance. The AGS segment providess e rvices, spares and factory automation software to customer fabra ication plants globally to help customers optimize performance of our large, global installedb ase of semiconductor ando ther equipment. The AGS segment also includes 200 millimeter( 2 00mm) ando ther equipment, which is shipped to many customers globally that serve the non-leading-edge end markets. Effeff ctive the first quarter of fiscal 2026 , our 200 mm equipment business will be moved to our Semiconductor Systemss egment. Demand for AGS’service and spares is driven by our large and growing installedb ase of manufactff urt ing systems, and customers’needs to shorten ramp times, improve system performance, and optimize factory output ando perating costs. Industryrr conditions that affeff ct AGS’sales of spares and services are primarily characterized by changes in semiconductor manufacff turers’ wafer starts andu tilization rates, growth of the installedb ase of equipment and growing service intensity of newer tools. Our strategy is to continue to shiftff the AGS’ service and spares business to a subsu cription agreement model, imp roving customer factory p erformance and opt imizingo p erating costs, and providing us a more predictabla e revenue stream. The Corporate and Other categoryrr includes revenues and costs of product not included in our reportabla e segments, as well as cer tain operating expenses thata r e not allocated to our reportabla e segments and are managed separately at thec o rporate level. These operating expenses include costs for certain management, finance, legal, human resources, and RD&E functions performed at thec orporate level; andu nabsorbed information technology ando ccupancy.u In addition, we do not allocate to our reportabla e segments charges associated with restructurt ing actions, sucha se m ployee severancec o sts and asset impairment charges, unless the restructurt ing actionsp ertain to a specific reportabla e segment. The United States governmenth as implemented export regulations for U.S. semiconductor technology sold or provided to customers in China, which have limited our ability to provide certain products and services to customers in China, over the past several years. The U.S. government continues to issue new export licensing requirements, and additional updates ando ther requirements that have had the effeff ct of further limitingo ur ability to provid e certain products and services to customers outside the U.S., including in China. Also, the United States has announced c hanges to its trade policy, including increased tariffsff on imports. These actions have caused subsu tantial uncertainty and have resulted in retaliatory measures, including n ew tariffs on U.S. goods imposed by China ando ther countries. Some of these actions have be en followedb y announcements of limited exemptions and temporaryp a u srr es. For a descriptiono f these risks, see the risk factors entitled “Business and Industryrr Risks - Global trade issues and changes in and unc ertainties with respectt ot rade pol icies and export regulate ions, including imporm t and export lic ense requirements,tt trade sanctions, tariffi sff and international trade di spii utes, have adverserr ly im pacm ted and couldll furthett r adverserr ly impacm t our business and op erations, and r educe thec o mpetitiveness of our produ cts and services relative to local and global competitors” and “Business and Industryr Risksii - We are exposed to risks and uncertainty related to changes in trade policies, and increased tariffsi and trade dispii utes ” in Part I, Item 1A, “Risk Factors.” 29
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Results of Operations Our fiscal2 025 and 2024 each contained 52 weeks. The following tabla e presents certain significant measurements for the periods presented: Change 2025 2024 2025 ove r 2024 (In millions, except per share amounts and percentages) Net revenue $2 7 ,176 $1 ,192$ 28,368 Gross margin 48.7 4% 7.5 % 1.2 points Operating income $7 ,867 $4 2 2$ 8,289 Operating margin 29.2 2% 8.9 % 0.3 points Net income $7 ,177 $$ 6,998 (179) Earningsp er diluted share $ 8.61 $ 0.0 5$ 8.66 Net revenue by segment for the periods presented were as follows: Change 2025 2024 2025 over 2024 (In millions, except percentages) Semiconductor Systems $ 20,798 73% $ 19 ,911 73% 4% Applied Global Services 6,385 23% 6 ,225 23% 3 % Corporate and Other 1,185 4% 1,040 4% 14 % Total $ 28,368 100% $ 27 ,176 100% 4% Net revenue for Semiconductor Systems by market for the periods presented were as follows: 2025 2024 Foundry, logic ando ther 67 % 68 % Dynamic random-access memory( DRAM) 26 %2 8 % Flash memory( NAND) 7 % 4 % 100 % 100 % Net revenue in fiscal2 025 increased asc ompared to the prior year. Gross margini ncreased primarily driven by higher net revenue, favorable changes in customera nd produc t mix, an increase in average selling prices, and lower material and manufactff urt ing costs. Semiconductor Systems net revenue increased in fiscal2 025 asc o mpared to the prior year a sc u stomers continued to make strategic investments in new capacity and new technology transitions. Foundry and logicc u stomers’s pending in fiscal 2025 increased driven primarily by high er customer investments inl eading-edge manufactff urt ing technologies. Memory customers’s p ending in fiscal2 025 was higher due to increased customer investments in NAND fabra ication equipment upgrades. Investments by semiconductor equipment customers aree x pected to remain strong with growthi n the adoptiono f high-bandwidth memory ando therf orms of advanced packaging, continued demand for AI andd ata center computing, and for non-leading edge nodes. The Semiconductor Systemss egment continued to representt he largest contributor ofn et revenue. Our AGS net revenue in fiscal2 025 increased compared to the prior year primarily due to higher customer spending o n long-term servicea greements and spares, partially offsff etb y lower customer spending on 200 mm equipment. Demand for services is expected to grow a s our installedb ase of systems and chambers increases and customers renew long-term service agreements. Over the longer term, we believe secular driverss u cha s data center AI, edge AI and the internet of things, robotics and electric and autonomous ve hicles will continue to create the next waveo f growth for semiconductors and expand ou r served market opportunities. We believe device refresh cycles, sucha s those for PCs and smartphones, will also contribute to the next waveo f growth. 30
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Net revenue by geog raphic region, d etermined by the location of customers’ facilities to which products were shipped and services were performed, was as follows: Change 2025 2024 2025 over 2024 (In millions, except percentages) China $ 8,529 30% $ 10 ,117 37% (16)% Korea 5,608 20% 4 ,493 17% 25 % Taiwan 6,857 24% 4 ,010 15% 71 % Japana 2,273 8% 2,154 8% 6% Southeast Asia 1,076 4% 1,141 4% (6)% Asia Pacific 24,343 86% 21 ,915 81% 11 % United States 3,063 11% 3 ,818 14% (20)% Europe 962 3 % 1,443 5% (33)% Total $ 28,368 100% $ 27 ,176 100% 4% Thec hanges in net revenue from customers in all regions for fiscal 2025 p rimarily reflected c hanges in investments in semiconductor equipment. Operatintt g Expexx nses Operating expenses for the periods presented were as follows: Change 2025 2024 2025 ove r 2024 (In millions) Research, development and engineering (RD&E) $3 3 7$ 3,570 $3 ,233 Marketing and selling $ 858 $ 836 $ 2 2 General and administrative (G&A) $ 961 $$ 910 (51) Restructurt ing charges $ 181 $ — $ 181 The year-over-year change in RD&E expenses was primarily du e to additional headcount to supporu t our ongoin g investments in product development initiatives andh i g her depreciation expenses, consistent with our grow th strategy. We continued to prioritize RD&Ei nvestments int echnical capabilities and criticalR D&E programs in current and new markets. Marketing and selling expenses forf iscal2 025 increasedp rimarily due to higher employee related expenses. General and administrativee x penses in fiscal 2025 decreased primarily due to lower spending on prof esff sional services, partially offsff etb y an impairment of goodwill of $41 million recognized during the fourth quarter of fiscal 2025. In the fourth quarter of fiscal2 025, we approved a workforce reduction plan (Fiscal 2025 Restructurtt ing Plan) to position us for continued grow tha s a more competitive and produc tive organiz ation and expect approxi mately 4% of our globa l workforce to be impacted under this plan. In the fourth qua rter of fiscal 2025 , we recognized $181 milliono f restructurt ing charges consisting primarily o f severance ando ther employment terminationb e nefits to be pa id in cash, ando ther non-cash related charges. We expect to complete the plan in fiscal 2026. Interest Expexx nse and Interest and Othett rI ncome (expeee nse), net Interest expense and interest ando ther income (expense), net for the periods presented were as follows: Change 2025 2024 2025 ove r 2024 (In millions) Interest expense $ 269 $ 247 $ 22 Interest ando ther income (expense), net $ 1,251 $ 532 $ 71 9 Interest expense incurred was primarily associated with senior unsecured notes. Interest expense in fiscal2 025 increased slightly as a result of the issuance of senior unsecured notes in June 2024. 31
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Interest ando ther income (expense), net in fiscal2 025 increased primarily driven by high er net gain on equity investments, partiallyo ffsff etb y lower interest income driven by lower cashb alances and a decrease inm arket interest rates. Income Taxesaa Provision for income taxes and effeff ctive tax rates for the periods indicated were as follows: Change 2025 2024 2025 ove r 2024 (In millions, except percentages) Provision for income taxes $ 2,273 $ 975 $ 1 ,298 Effeff ctive income tax rate 24.5 % 12.0 % 12.5 points Our provision for income taxes and effeff ctive tax rate are af feff cted by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates ando ther income tax incentives. It is also affeff cted by events that vary from period to period, sucha s changes ini ncome tax laws and the resolution of prior years’income tax filings. Our effeff ctive tax rate forf iscal2 025 was higher than the prior fiscaly ear primarily due to a $659 million remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore and the recognitiono f a $407 millionv aluation allowancea g a inst deferred tax assets related to corporate alternative minimumt a x (CAMT) credits. These cr edits are not expected to be realized as a result of changes in the timingo f future tax deductions, following thee nactment of the One Big Beautifulff Bill Act. No prudent and feasible tax-planning strategies arec u rrently availabla e. The amount of the valuation allowance mayb e adjud sted in future quarters if estimates of future taxable income change. Segme ent Operatintt g Income (Loss) Operating income (loss) by segment for the periods presented were as follows: Change 2025 2024 2025 over 2024 (In millions, except percentages and ratios) Operating income (loss) Semiconductor Systems $ 7,379 $ 6 ,981 $ 398 6 % Applied Global Services 1,792 1 ,812 (20) (1)% Corporate and Other (882) (926) 445 % Total $ 8,289 $ 7 ,867 $ 422 5 % Operating margin Semiconductor Systems 35.5 % 35.1 % 0.4 points Applied Global Services 28.1 %2 9.1 % (1.0) points Semiconductor Systems’ operating margin forf i scal2 025 increased co mpared to the same period in the prior year primarily driven by high er net revenue, favorable changes in customera nd produc t mix, lower material and manufacff turing costs, and an increase in average selling prices, partiallyo ffsff etb y increased RD&E expenses. AGS’ operating margin forf i scal 2025 decreased compared to the same periods in the prior year primarily due to a decrease in 200mm equipment net revenue, higher expense related to an increase in headcount to supporu t business growth, and higher excess and obsolete inventory charges, partiallyo ffsff etb yh i g her net revenue from services and spares. 32
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Recent Accounting Pronouncements Accountintt g Standardstt Not Yet Adoptdd edtt Targeted Imprm ovements to th e Accounting forI nternal-UseUU Softwff are. In September 2025, the Financial Accounting Standards Board (FASB) issued an accounting standard update to increase the operabia lity of the recognition guidanc e considering different methods o f software development by replacing thec u rrent stage-based capitalization model with a principles-based approach. Under the new guidance, costs arec apia talized once management authorizes and commits to funding the software project, iti s probable that the project will be completed and the software will be us ed to perform the function intended. This authoritative guidance will be effeff ctive for us beginnin g with our interim and annual reporting forf i scaly ear 2029, with early adoption permitted. We are eval uating the effeff ct of this guidance on our consolidated financial statements and relatedd isclosures. Measurement of Credit Losses forA ccountstt Receivable and Contratt ct Assets. In July 2025, the FASB issued an accounting standard update to provide a practical expedientt hat simplifies thec alculationo f expected creditl osses (Topic 326). The practical expedient allows an entity to a ssume that current conditions as of the balance sheet date do not change for the remaining lifeff of the asset, thereforff e, an e ntity will no longer need to develop reasonable and supporu tabla e forecasts of futurt e economic conditions. This authoritative guidance will be effeff ctive for us beginnin g with our interim and annual reporting for fisff cal year 2027, with early adoption permitted. Although this guidance will simplify our procff ess of calculating expected credit losses on accounts receivable and contracta ssets, we do not expect this guidance to materially impact our consolidated financial statements or relatedd isclosures. Disaii ggregation of Income Statements Expensx es. In November 2024, the FASB issued an accounting standard update to improve income statement expenses disclosures (Subtopic 220-40). The standard requires more detailed information related to the types of expenses, including (amongo t h er items) the amounts of purchases of inventory, employeec o mpensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expensec apta ion, as applicable. This authoritative guidancec an be applied prospectively or retrospectively and will be effeff ctive for us in fiscal2 028 for annual periods and in the first quarter of fiscal 2029 for interim periods, with early adoption permitted. Wea re evaluating thee ffeff ct of this guidance on our consolidated financial statements and relatedd isclosures. Improvm ements to Income Taxaa Discii losures. In December 2023, the FASB issued an accounting standard update to imp rove income tax disclosures (Topic 740). The standard prescribes specific categories for thec o mponents of thee f feff ctive tax rate reconciliation, requires disclosure of income taxes paid by jurisdiction, and modifies other income tax-relatedd isclosures. This authoritative guidance will be effeff ctive for us beginnin g with our annual reporting forf i scaly ear 2026. We are eval uating the effeff ct of this guidance on our consolidated financial statements and relatedd isclosures. Accountintt g Standardstt Adoptdd edtt For a descriptiono f recently adopted accounting standards, including the date of adoption and thee f feff ct, if any, on ou r consolidated financial statements, see Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements. 33
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Financial Condition, Liquiditya nd Capital Resources Our cash, cashe quivalents and investments consistedo f the following: October 26, 2025 October 27, 2024 (In millions) Cash and cash equivalents $8 ,022$ 7,241 Short-term investments 1,332 1 ,449 Long-term investments 4, 2,787327 Total cash, cash-equivalents and investments $ 12,900 $ 12 ,258 Sources and Uses of Cash A summary of cash provided by (used in) operating, investing, and financing activities was as follows: 2025 2024 (In millions) Cash provided by operating activities $ 7,958 $8 ,677 Cash used ini nvesting activities $ (2,782) $ (2,327) Cash used in financing activities $ (5,977) $ (4,470) Operatintt g Activitiestt Cash from operating activities forf i scal2 025 was $8.0 bi llion, which reflects net income adjud sted for thee f feff ct of non- cash charges and changes in working capital components. Significant non-cash charges included dep reciation, amortization, gain or loss on investments or asset sale, share-based compensation, deferred income taxes and restructurt ing charges. Cash provided by operating activities in fiscal2 025 was lower primarily due to higher payments for income taxes and inventory. We have agreements with various financial institutions to sella ccounts receivable andd iscount pro missory notes from selected cu stomers. We sell our accounts receivable generally without recourse. From time to time, we also discount letters of crediti ssued by customers through various financiali nstitutions. The discounting of letters of credit depends o n many factors, including the willingness of financiali nstitutions to discount the letters of credit and thec o st of sucha rrangements. We sold $501 million and $444 milliono f accounts receivable during fiscal2 025 and 2024, respectively. We did not discount letters of crediti ssued by customers in fiscal2 025 and 2024. There was no d iscounting of promissory notes in each of fiscal2 025 and 2024. Our working capia tal was $12.9 billion at October 26, 2025 and $12.8 billion at October 27, 2024. Days sales outstanding of ou r accounts receivable at the endo ff i scal2 025 and 2024 was 69d a ys and6 8d a y s , respectively. Days sales outstanding varies due to the timing of shipments andp a yment terms. The slight increase in days sales outstanding was primarily due to unfavff orable revenue linearity. Investingn Activities We used $2.8 bi llion and $2.3 bi lliono f cash in investing activities in fiscal2 025 and 2024 , respectively. Capia tal expenditures in fiscal2 025 and 2024 were $2.3 bi llion and $1.2 bi llion, respectively. Capia tal expenditures were primarily for investments in real prop erty and improvements, demonstration and testing equipment, manufactff urtt ing and network e quipment. Purchases of investments, net of proceeds from sales and maturities of investments, for 2025 and 2024 were $526 million and $1.1 bi llion, respectively. Net proceeds from asset sale were $33 million, and net cash paid for acquisition was $29 million in fiscal 2025 . Investing activities also included investments in technology to allow us to access new market opportunities or emerging technologies. Our investmentp ortfolff io consists principally of investmentg rade money market mutual funds, U.S. Treasury and agency securities, municipal bonds, corporate bonds and mortgage-backed and asset-backed securities, as wella se quity securities. We regularlym o nitor thec r edit risk in our investmentp o rtfolff io and take appropriate measures, which may include the sale of certain securities, to manage such risks prudently in accordance with our investment policies. 34
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Financii ing Activitiii es We used $6.0 billiono f cash in financing activities in fiscal 2025, consisting primarily of repurchases of common stock of $4.9 bi llion, cashd ividends to stockholders of $1.4 bi llion, repayment of $70 0 million seniorn otes and tax withholding payments for vested equity awards of $248 million, pa rtially offsff etb yn et proceeds received fromt he issuance of senior unsecured notes of $991 million and proceeds received from common stock issuances under our employee stock purchase plan of $261 million. We used $4.5 bi llion of cash in financing activities in fiscal 2024 , consisting primarily of repurchases of common stock of $3.8 bi llion, cashd ividends to stockholders of $1.2 bi llion and tax withholding pay ments for vested e quity awards of $291 million, and net payments of principal on financing leases of $102 million,p a rtially offsff etb yn et proceeds received from the issuance of senior unsecured notes of $69 4 million and proc eeds received from common stock issuances under our employee stock purchase plan of $243 million. In March 2025, our Boardo fD i rectors approved a common stock repurchase program a uthorizing $10.0 bi llion in repurchases, which supplu emented the previous $10.0 bi llion authorization approved in March 2023. At October 26, 2025, approximately $14.0 billion remained availabla e for future stock repurchases under the repurchase program. During each of fiscal2 025 and 2024 , we paid four qua rterly cash dividends, totaling $1.4 bi llion and $1.2 bi llion, respectively. Wec urrently anticipate that cashd ividends will continue to be paid on a quarterly basis, although the declaration of any future cashd ividend is at the discretiono f the Boardo fD irectors and will depend on ou r financial condition, results of operations, capital requirements, business conditions ando therf actors, as wella s a determination by the Boardo fD irectors that cashd ividends are in the best interests of our stockholders. We have credit facilities for unsecured bor rowings in various currencies of up to an a ggregate a mount of $4.1 bi llion. These credit facilities consist of a $2.0 billion five-year committed revolving credit agreement with a group of bank s (Five-Year Credit Agreement), a $2.0 bi llion 364-day committed revolving credit agreement with a group of bank s (364-Day Credit Agreement), and revolving credit facilities with Japanea se banks pu rsuant to which we mayb o rrow up to approximately $53 million in aggregate at any time. The Five-Year Credit Agreement is scheduled to expire in February 2030, unless extended as permitted under the terms of the a greement. 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 orp art of such loans to term loans that will mat ure in September 2027, subju ect to payment of a fee by u s ando ther customaryrr conditions. The Five-Year Credit Agreement and the 364-Day Credit Agreement each includes financial ando ther covenants with which we were in compliance as of October 26, 2025. No amounts were outstanding und er anyo f these c redit facilities as of October 26, 2025 and October 27, 2024. See Note 9, Borrowing Facilities and Debt, of the Notes to the Consolidated Financial Statements for further discussion related to our credit facilities. We have a short-term commercial pap er program under which we may issue unsecured commercialp a per notes up to a total of $4.0 bi llion. We increased the amount of commercial pap er notes we may issue to $4.0 bi llion in the fourth qua rter of fiscal 2025 , subsu equent to increasing the amount from $1.5 bi llion to $2.0 bi llion in the third qua rter of fiscal 2025 . The proceeds fromt he issuances of commercialp a per are used for general corporate purposes. At October 26, 2025, we had $10 0 milliono f commercial paper notes outstanding. In September 2025, we issued $550 million in aggregate principal amount of 4.000% senior unsecured notes due 2031 and $450 million in aggregate principal amount o f 4.600% senior unsecured notes due 2036 , in a registered public offeriff ng. In October 2025, we used ap o rtion of the net proceeds from the offeriff ng to repay the outstanding $70 0 million in aggregate principal amount of our 3.900% senior unsecured notes due October 1, 2025. The remaining net proceeds fromt he issuance of the senior unsecured notes are intended for general corporate purposes. We had senior unsecured notes in the aggregate principal amount of $6.5 bi lliono utstanding as of October 26, 2025. See Note 9 of the Notes to the Consolidated Financial Statements for additional discussion of existing debt. We may seek to refinance our existingd e b t and may incur additional indebtedness depending on ou r capital requirements, general corporate purposes and the availabia lity of financing. 35
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Othett rs OnD ecember 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). The Tax Act requires a one- time transition tax on certain unrepatriated e arnings of foreign subsu idiaries. The transition tax expense has been paid in installmentss tarting withf i scal 2018 , and as of October 26, 2025, we hado ne remaining payment of $25 5 million, payable in February of 2026. OnA ugust 9, 2022, the U.S. government enacted the U.S. CHIPS and Science Act (CHIPS Act). The CHIPS Act creates a 25% investment tax credit for certain i nvestments in domestic semiconductor manufactff urt ing. Thec rediti s provided for qualifying propeff rty, which is placed in servicea fteff r December 31, 2022, for which construcrr tion begins before January 1, 2027, and is treated as a governmentg rant recognized against property, plant and equipment and a reductiono f income taxes payable. We recognize this investment tax credit when there is reasonable assurance that we w ill qua lifyff for thec redit and the benefit will be received. As of October 26, 2025, our current income taxes payable was reduced by $23 3 million, and futurt e income taxes payable will be reduced by $548 million, both of which are due to the investment tax credit. On July 4, 2025, the U.S. government enacted the One Big Beautifulff Bill Act (OBBBA). The OBBBA includes a broad range of tax reform provisions including extending and modifying certain key Tax Act provisions and expanding certain Chips Act incentives. These changes include full expensing of do mestic research costs, immediatee x pensing of qualifying propeff rty and increasing the investment tax credit for certaini nvestments in domestic semiconductor manufactff urtt ing from 25% to 35%. Key tax provi sionso f the OBBBA are designed to accelerate tax deductions bu t that mayh a ve a detrimental impact on our ability to use certain t ax credits. The use of certain tax credits may not b e economically viable if it requires electing to forgo significant tax deductions. Most of the provisions are effeff ctive beginning in fiscaly ears 2026 or 2027 , withi m mediate expensing of qualifying propeff rtyb eing effeff ctive in fiscal 2025. We will continue to evaluate the full impact of these legislative changes as more guidance becomes availabla e. Various countries where we do business have enactedo rp l an to enact new tax laws to implement the global minimum tax regimes basedo n the Organization for Economic Cooperation and Development Base Erosion and Profitff Shifting Project, and wheree nacted, the rules began to be effeff ctive in fiscal 2025 . The impact of thec u rrently enacted legislation is not material to our fiscal2 025 financial results. Wec o ntinue to monitor developments and evaluate impa cts, if any, o f these rules on our results of operations and cashf l ows. The adoption and effeff ctive dates of these rules vary by country and could increase tax complexity andu ncertainty and may adversely affeff ct our provision for income taxes in future years. We have been granted additional conditional reduced tax rates in Singapore that expire beginning in fiscal 2030. Although cash requirements willf l uctuate basedo n the timing and extent of factorss u cha s those discussed above, our management believes that cash generated from operations, together with the liquidity provided b y existing cashb alances and borrowing capability, will be sufficient to satisfy our liquidity requirements for the next 12 months. Forf urther details regarding our operating, investing and financing activities, see the Consolidated Statements of CashF lows int h is report. For details on standby letters of credit, guarantee instruments ando ther agreements with banks , see Off-Bff alance Sheet Arrangements below. 36
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Contractual Obligations and Off-Bff alance Sheet Arrangements We have certain on-balance sheet ando f f-bff alance sheet obligation arrangements to make future payments under various contracts. Certain contractuat l arrangements which are recorded on our balance sheet include borrowing facilities andd e bts and lease obligations. Borrowingii Facilitii iett s and Debt Obligatiott ns As of October 26, 2025, we had $6.5 bi llion in aggregate principal amount of senior unsecured notes with varying maturities, which are due beyond 1 2 months. Future interestp a yments associated with these unsecured notes were $2.9 billion, of which $246 million is due within 12 months and the remaining interestp a yments are due beyond 1 2 months. See Note9 , Borrowing Facilities and Debt, of the Notes to the Consolidated Financial Statements for further discussion related to our borrowing facilities and debt obligations. Lease Obligatiott ns As of October 26, 2025, our op erating lease obligation was $565 million related to va irious op era iti gng llease arra gngements for cer itain fa icili ilities, of hwhiich $104h million iis payablpayable iwi hithin 12 mo hnths andd hthe re iimainingg amount iis payablpayable beyond 12beyond 12 mo hnths. Purchase Obligatiott ns As of October 26, 2025, we had $10.6 bi llion of purchase obligations for goods and services, of which $7.3 bi llion is payable within 12 months and the remaining amount is payable beyond 12 months. Deemed Repatee ritt ati iott n Taxaa Payaa ble As of October 26, 2025, we hado ne remaining payment of $255 million, payable in February of 2026. This transition tax liabia lity is associated with the deemed repatriationo f accumulated foreign earnings as a result of thee nactment of the Tax Act. Othett r Long-tgg ertt mrr Liabilitii iestt Wea lso have the obligation to fund our p ension,p ostretirement andd eferred compensation plans. Wee v a luate the need to make contributions to our pension and postretirement benefit plans afteff r considering the funded status oft the plans, movements in the discount rate, performance of the plan assets and related tax consequences. Payments to the plans would be dependent o n these factors and couldv ary across a wide range o f amounts and time periods. Payments for deferred compensation plans are dependent on activity by participants, making the timing of payments uncertain. As of October 26, 2025, the total of our future expected benefit payments for the pension plans and the postretirement plan over the next ten fiscaly ears were $250 million, of which $19 million is payable within 12 months and the remaining amount is payable beyond 12 months. As of October 26, 2025, the gross liabia lity for unrecognized tax benefits that was not expected to result in payment of cash within one y ear was $452 million. Interest andp e n alties related to uncertain t ax pos itions that were not expected to result in payment of cash within one y ear of October 26, 2025 was $118 million. At this time, we are unable to reliablya estimate the timing of payments due to uncertainties in the timing of tax audit outcomes. Off-Bff alance Sheet Arrangements In the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiatedb y either us o r our subsu idiaries. These include agreements with various b anks to facilitate subsu idiary banking op erations worldwide, including overdraft arrangements. Wea l so have agreements with various banks to facilitate subsu idiary banking op erations worldwide, including ov erdraft arrangements, issuance ofb a n kg u arantees, and letters of credit. See Note 14, Guarantees, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements for further discussion relating to these arrangements. 37
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CriticalA ccounting Estimates The preparation of consolidated financial statements and relatedd isclosures in conformity witha ccounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affeff ct the amounts reported. Estimates and assumptions about future events and their effeff cts cannot be de termined with certainty. We base our estimates onh i storical experience ando n various o ther assumptions be lieved to be applicable and reasonable under the circumstances. Thesee s timates may change as new events occur, as additional information is obtained and as our op erating environment changes. Thesec hanges have historically been minor and have be en included in thec o nsolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within our control and will not be known for prolonged p eriods o f time. These uncertainties include those discussed in Part I, Item 1A, “Risk Factors.” Management believes that the following is a critical accounting estimate: Income Taxeaa s Wea r e subju ect to income taxes in the U.S. and numerous foreign jurisdictions. Thec alculation of our p rovision for income taxes and effeff ctive tax rate involvess ignificant judgment in estimating the impact of uncertainties in the applicationo f complex and evolving tax laws. Resolutiono f these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial condition. We recognize a current tax liabia lity for thee s timated amount of income taxes payable on tax returns for the current fiscaly ear. Deferred tax assets and liabia lities are recognized for thee s timated future tax effeff cts of temporaryd irr fferences between the book and tax bases of assets and liabia lities. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. Deferred tax assets and liabia lities are adjud sted to reflect the effeff cts of enacted changes int ax rates, laws and status,t including changes int ax incentives. We record a valuation allowancea g a inst deferred tax assets when iti s more likely than not that some portion, or all, of the assets will not be realized. In making this assessment, we we igh all availabla e positive andn e g ativee v idence, including expected future taxable income, existing taxable temporaryd irr fferences, carryback potential and prudent and feasible tax-planning strategies. The accelerationo f tax deductions for U.S. tax purpos es, under the One Big Beautifulff Bill Act, limits our ability to use our corporate minimum tax credits. As a result, we have recorded a full valuation allowancea g a inst this deferred tax asset. We reviewed potentialt ax-planning strategies to accelerate income recognition within a reasonable time, but none were prudent and feasible. We will continue to evaluate new strategies as additional One Big Beautifulff Bill Act guidance is issued. 38
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Item 7A: Quantitattt ivtt e and Qualitall tive Discii losures About Market Riskii Wea r eexposed to financial market risks, including fluctuations in interest rate and foreign currency exchange rates. Interest Rate Risk Available-fo- r-sale Debt Securities - The market value of our investments in availabla e-for-sale securities was approximately $3.2 bi llion at October 26, 2025. An immediate hypothetical 100 basis point increase ini n terest rates would result in a decrease in the fair value of investments as of October 26, 2025 of approximately $36 million. Debt - At October 26, 2025, the a ggregate principal of long-term senior unsecured notes issued by u s was $6.5 bi llion witha n estimated fair value of $6.2 bi llion. A hypothetical decrease ini n terest rates of 100 basis points would result in an increase in the fair value of our long-term seniorn otes issuances of approximately $462 million at October 26, 2025. From time to time, we use interest rate swaps or rate locka greements to mitigate the potential impa ct of changes in benchmark interest rates on interest expense and cashf lows. Foreign Currency Risk Certain of our op erations are conducted in foreign currencies, sucha s Japanea se yen, Israeli shekel, euro and Taiwanese dollar. Hedges are used to reduce, butn ot eliminate, the impact of foreign currency exchange rate movements on the consolidated balance sheet, statement of operations, and statement of cash flows. A hypothetical1 0% adversec hange in foreign currency exchange rates relative to the U.S. Dollar would result in a decrease in the fair value of these hedging contracts of $177 million at October 26, 2025. We use primarily foreign currency forward contracts to offsff et the impact of foreign exchange movements onn on-U.S. dollar denominated monetary assets and liabia lities. The foreign exchangeg a ins and losses on the assets and liabilities are recorded ini n terest ando ther income (expense), net and are offsff etb y the gains and losses on the hedges. We use foreign currency forward and opt ion contracts to hedge a portiono f anticipated non-U.S. dollar denominated revenues and expenses ex pected to occur within the next 2 4 months. Gains and losses on these hedging contracts generally mitigate the effeff ct of currency movements on ourn et revenue, cost of products sold, ando perating expenses. We do not use foreign currency forwardo ro p tion contracts for trading or speculative purposes. Item 8: Financii ial Stattt emtt ents and Supplu emenll tary Data Thec onsolidated financial statements requiredb y this Itema re set fortho n the pages indicated at Item 15(a). Item 9: Changes in and Disaii gra eements withii Accountantt ts onA ccountintt g and Financii ial Discii losure None. 39
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Item 9A: Contrott ls and Procedures Disclosure Controls and Procedures As of the endo f the period coveredb y this report, our management conducted an evaluation, under the supeu rvision and with the participationo fo u r Chief Executive Offiff cer and Chief Financial Offiff cer, of thee ffeff ctiveness of our disclosure controls and proc edurd es, as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the Exchange Act). Based upon that evaluation, our Chief Executive Offiff cer and Chief Financial Offiff cer concluded that our disclosure controls and procedurd es were effeff ctive as of thee ndo f the period coveredb y this report in ensuring that information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosedb yu s in such reports is accumulated and communicated to our management, including our Chief Executive Offiff cer and Chief Financial Offiff cer, as appropriate to allow timely decisions regarding requiredd isclosure. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establa ishing and maintaining adequate internal control over financial reporting, a s such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supeu rvision and with the participationo fo u r Chief Executive Offiff cera nd Chief Financial Offiff cer, our management conducted an evaluationo f thee f feff ctiveness of our internal control over financial reportingb ased upon the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basedo n that evaluation, our management concluded that our internal control over financial reporting was effeff ctive as of October 26, 2025. KPMG LLP, an independent registered public accounting firm, has audited thec onsolidated financial statements included in this Form 10-K and, as part of the audit, has issued a report, included herein, on thee ffeff ctiveness of our internal control over finff ancial reporting as of October 26, 2025. Changes in Internal Control over Financial Reporting During the fourth qua rter of fiscal 2025 , there were no changes in the internal control over financial reporting that materially affeff cted, or are reasonably likely to materially affeff ct, our internal control over financial reporting. Inherent Limitations of Disclosure Controls and Procedures and Internal Control over Financial Reporting It shouldb e noted that any system of controls, however well designed ando perated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the designo f any control system is based in part upon certain assumptions about the likelihood of future events. Item 9B: Othett rI nfon rmationtt During the three months ended October 26, 2025, no director or of fiff cer, as defined in Rule 16a-1(f),a dopted or terminated a “RulRR e 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” eacha s defined in Regulation S-K Item 408. Item 9C: Discii losure Regardie ngii Foreigngg Jurisdictidd ons that Prevent Inspectiott ns Not applicable. 40
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PART III Item 10: Direii ctortt s,rr Executivtt e Offiff cers and Corporatett Governance Except for the information regarding executive offiff cers requiredb y Item 401 of Regulation S-K (which is included in PartI , Item 1 of this Annual Report on Form 10-K, under “Inforff mation about our Executive Offiff cers”), and code of ethics and insider trading policy (whicha re set forthb e low), the information requiredb y this item will be provided in accordance with Instruction G(3) to Form 10-K no later than February 23, 2026. We have implemented the Standards of Business Conduct, a code of ethics with which everyp err rson who works for us and everyrr member of the Boardo fD irectors is expected to comply. If any subsu tantive amendments are made to the Standards of Business Conduct or any waiver is granted, including any implicit waiver, from a provision of thec ode to our Chief Executive Offiff cer, Chief Financial Offiff cer or Chief Accounting Offiff cer, we will disclose the nature of sucha mendment or waiver on our website or in a report on Form 8-K. The above information, including the Standards of Business Conduct, is a vailabla e on our website under the Governance Documentss e ction at https://www.appliedmaterials.com/us/en// /about/ctt orporate- governance.html.tt This website address is intended to be an inactive, textual reference only. None of the materials on, or accessible through, this website is part of this report or is incorporated by reference herein. We have adopted an Insider Trading Policy gov erning the purchase, sale, ando ther dispositions of our securities by ou r directors, offiff cers, employees ando ther individuals associated with us that we believe is reasonably d esigned to promote compliance withi nsider trading laws, rules and regulations, and listing standards applicable to us. A copy o f our Insider Trading Policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K. Item 11: Executive Compensation The information requiredb y this Item will be provided in accordance with Instruction G(3) to Form 10-K no later than February 23, 2026. 41
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Item 12: Securityii Ownership of Certaitt nii Benefie ciali Owners and Managea ment and Related Stockholdett rM atters Except for the information regarding securities authorized for issuance under equity compensation plans (which is set forthb elow), the information requiredb y this Item willb ep rovided in accordance with Instruction G(3) to Form 10-K no later than February 23, 2026. The following tabla e summarizes information with respect to equity awards u nder our equity compensation plans as of October 26, 2025: Equity Compensation Plan Information Plan Category (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(2) (c) Number of Securities Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) (In millions, except prices) Equity compensationp lans approved by security holders 9 $ — 25 (3) Total 9 $ — 25 (1) Includes only restricted stock units andp erformance share units outstanding und er our equity compensation plans, as no options, stock warrants or other rights were outstanding as of October 26, 2025. (2) The weighted average exercise pricec alculation does not take into account any restricted stock units orp erformance shares. (3) Includes 8 million shares of our common stocka vailabla e for future issuance under the Applied Materials, Inc. Omnibus Employees’StockP urchase Plan. Of these 8 million shares, 1 million are subju ect to purchase during the purchase period in effeff cta s of October 26, 2025. We have the following equity compensation plan that has not been approved by stockholders: Applpp ied Materialsll Profitff SharingS c heme. The Applied Materials Profitff Sharing Scheme was adopted ef feff ctive July 3, 1996 and amended from time to time to enable employees of Applied Materials Ireland Limited and its participating subsu idiaries to purchase our common stock at 100 % of fair market value on the purchase date. Under this plan, eligible employees may elect to foregoa certain portiono f their base salary and certain bonuses they have earned and that otherwise would be payabl e in cash to purchase shares of our common stock at full fairm arket value. Since thee ligible employees pay full fairm arket value for the shares, there is no reserved amount of shares under this plan and, accordingly, the tabla e above does not include any set number of shares availabla e for future issuance under the plan. 42
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Item 13: Certaitt nii Relationships andii Related Transactiott ns, ands Direii ctortt Independencedd The information requiredb y this Item will be provided in accordance with Instruction G(3) to Form 10-K no later than February 23, 2026. Item 14: Principalii Accountingii Fees and Services Our independent registered public accounting firm is KPMG LLP, Santa Clara, Californiff a, Auditor FirmI D: 185. The information requiredb y this Item will be provided in accordance with Instruction G(3) to Form 10-K no later than February 23, 2026. 43
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PART IV Item 15: Exhibii tsii ,s Financii ial Stattt emtt ent Schedules (a) The following documents are filed as part of this Annual Report on Form 10-K: Page Number (1)F inancial Statements: Report of Independent Registered Public Accounting Firm 45 Consolidated Statements of Operations 47 Consolidated Statements of Comprehensive Income 48 Consolidated Balance Sheets 49 Consolidated Statements of Stockholders’ Equity 50 Consolidated Statements of Cash Flows 51 Notes to Consolidated Financial Statements 53 (2) Exhibits: The exhibits listed in the accompanying Index to Exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K 84 All other schedules are omittedb ecause they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto. Item 16: Form 10-K- Summary None. 44
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REPORT OFI NDEPENDENTR EGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Boardo fD irectors Applied Materials, Inc.: Opinions on the Consolidatdd ed Financial Statements and Internal Contrott l OverF inancial Repore ting We have audited the accompanying consolidated balance sheets of Applied Materials, Inc. and subsu idiaries (the Company) as of October 26, 2025 and October 27, 2024, the related consolidated statements of operations, comprehensive income, stockholders’equity, and cash flows for each of the years in the three-year period ended October 26, 2025, and the related notes (collectively, thec o nsolidated financial statements). Wea l so have audited the Company’s internal control over financial reporting as of October 26, 2025, basedo n criteria establa ished in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the consolidated financial statements referred to above p resent fairly, in all material respects, the financial positiono f the Company as of October 26, 2025 and October 27, 2024, and the results of its operations and its cashf l ows for each of the years in the three-year period ended October 26, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effeff ctive internal control over financial reporting as of October 26, 2025 basedo n criteria establa ished in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effeff ctive internal control over financial reporting, and for its assessment of thee ffeff ctiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over FinancialR eporting. Our responsibility is to express an opinion o n the Company’s consolidated financial statements and an opinion o n the Company’s internal control over financial reporting basedo n our audits. We are a publ ic accounting firm registered with the Publu ic Company Accounting Oversight Board (United States)( PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. Wec onducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan andp erform the audits to obtain reasonable assurance about whether thec o nsolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effeff ctive internal control over financial reporting was maintained in all material respects. Our audits of thec onsolidated financial statements included perforff ming procedurd es to assess the risks of material misstatement of thec o nsolidated financial statements, whether due to error or fraud, andp erforming procedurdd es that respond to those risks. Such proc edurd es included examining,o n a test basis, evidence regarding the amounts andd isclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made b y management, as wella se v aluating the overallp resentationo f thec o nsolidated financial statements. Our audit of internal control over financial reporting included ob taining an understanding of internal control over financial reporting,a ssessing the risk that a material weakness exists, and testing and evaluating the design ando perating effeff ctiveness of internal control based on the assessed risk. Our audits also included p erforming such other procedurd es as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definitioe n and Limitationso f Internal Contrott l OverF inancial Repore ting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliabia lity of financial reporting and the preparationo f financial statements for external purpo ses in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and proc edurd es that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thec ompany; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparationo f financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance witha uthorizations of management andd irectors of the company; and (3) provide reasonable assurance regarding preventiono r timely detectiono f unauthorized ac quisition, use, or dispositiono f thec ompany’s assets that could have a material effeff ct on the financial statements. Because of its inherent limitations, internal control over financial reporting may not p revent or detect misstatements. Also, projections of any evaluationo f effeff ctiveness to future periods are subju ect to the risk that controls may b ecome inadequate because of changes in conditions, or that the degree of compliance with the policies or procedurdd es mayd eteriorate. 45
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Critical Audit Matter Thec r itical a udit matter communicated below is a matter arising fromt hec u rrentp eriod audit of thec o nsolidated financial statements that was communicatedo r required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to thec onsolidated financial statements and (2) involved our especially challenging, subju ective, or complex judgments. Thec o mmunicationo f a critical audit matter does not alter in any way our opinion o n the consolidated financial statements, taken as a whole, and we are not, b y communicating thec r itical a udit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Evaluation of suffu icff iencyc of audit evidence overr evenue As discussed in Notes 1 and 15 to thec o nsolidated financial statements, the Company recorded $28,368 million in net revenue, for the year ended October 26, 2025. The Companyg e nerates revenue by providin g manufactff urtt ing equipment, services and software to customers in the semiconductor, display and related industries. The Company’s process to account for and recognize revenue differs across revenue streams. We identified thee v aluation of the sufficiency of audit evidence obtained ove r net revenue as a critical a udit matter. Evaluating the sufficiency of audit evidence required subju ective auditor judgment due to the number of revenue streams and separate processes to account for and recognize revenue. This included de termining the nature and extent of audit evidence obtained over each revenue stream. The following are the primary procrr edurd es we performed to address this critical audit matter. Wea p p lied auditor judgment to determine the revenue streams over which procedurdd es were performed as wella s the nature and extent of such procedurd es. For revenue streams where procedurd es were performed, we: •e valuated the design and tested the operating effeff ctiveness of certain int ernal controls over the Company’s revenue recognition processes, including the Company’s controls over the accurate recording of revenue. •e valuated the Company’s revenue recognition accounting policies. •e valuated, for a sample of revenue transactions, (1) the accounting for consistency with the Company’s accounting policies, as applicable, including timing of revenue recognition, and (2) the recorded amounts by comparing them for consistency to underlying documentation, including the customer contracts. In addition, we evaluated the sufficiency of audit evidence obtained b y assessing the results of the procedurd es performff ed, including the appropriateness of the nature and extent of audit effortff over revenue /S/ KPMG LLP KPMG LLP We have served as the Company’s auditor since 2004. Santa Clara, Californiaff December 12, 2025 46
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APPLIED MATERIALS, INC. CONSOLIDATED STATEMENTS OF OPERATRR IONS (In millions, except per share amounts) FiscalY ear 2025 2024 2023 Net revenue $ 28,368 $ 27 ,176 $ 26 ,517 Cost of products sold 14,560 14 ,279 14 ,133 Gross profitff 13,808 12 ,897 12 ,384 Operating expenses: Research, development and engineering 3,570 3 ,233 3 ,102 Marketing and selling 858 836 77 6 General and administrative 910 961 85 2 Restructurtt ing charges 181—— Total operating expenses 5,519 5 ,030 4 ,730 Income from operations 8,289 7 ,867 7 ,654 Interest expense 269 247 238 Interest ando ther income (expense), net 1,251 532 30 0 Income before income taxes 9,271 8 ,152 7 ,716 Provision for income taxes 2,273 975 86 0 Net income $ 6,998 $ 7 ,177 $ 6 ,856 Earningsp er share: Basic $ 8.71 $ 8.68 $ 8.1 6 Diluted $ 8.66 $ 8.61 $ 8.11 Weighted average number of shares: Basic 804 827 84 0 Diluted 808 83 4 845 See accompanying Notes to Consolidated Financial Statements. 47
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APPLIED MATERIALS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) FiscalY ear 2025 2024 2023 Net income $ 6,998 $ 7 ,177 $ 6 ,856 Other comprehensive income (loss), net of tax: Change in unrealized gain (loss) on availabla e-for-sale investments 18 43 25 Change in unrealized net loss on derivative instruments5 3 31 (66) Change in defined and postretirement benefit plans( 13) (25) 26 Other comprehensive income (loss), net of tax 58 49 (15) Comprehensive income $ 7,056 $ 7 ,226 $ 6 ,841 See accompanying Notes to Consolidated Financial Statements. 48
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APPLIED MATERIALS, INC. CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) October 26, 2025 October 27, 2024 ASSETS Current assets: Cash and cash equivalents $ 7,241 $ 8 ,022 Short-term investments 1,332 1 ,449 Accounts receivable, net 5,185 5 ,234 Inventories 5,915 5 ,421 Other current assets 1,208 1 ,094 Total current assets 20,881 21 ,220 Long-term investments 4,327 2 ,787 Property, plant and equipment, net 4,610 3 ,339 Goodwill 3,707 3 ,732 Purchased technology ando ther intangible assets, net 226 24 9 Deferred income taxes ando ther assets 2,548 3 ,082 Total assets $ 36,299 $ 34 ,409 LIABILITIES AND STOCKHOLDERS’EQUITY Current liabia lities: Short-term debt $ 100 $ 79 9 Accounts payable and accrued expenses 5,333 4 ,820 Contract liabia lities 2,566 2 ,849 Total current liabilities 7,999 8 ,468 Long-term debt 6,455 5 ,460 Income taxes payable 356 67 0 Other liabia lities 1,074 81 0 Total liabia lities 15,884 15 ,408 Commitments and contingencies (Note 14) Stockholders’equity: Preferred stock: $0.01 par value per share; 1 shares authorized; no shares issued — — Common stock: $0.01 par value per share; 2,500 shares authorized; 793 and 818 shares outstanding at 2025 and 2024, respectively 8 8 Additional paid-in capia tal 10,333 9 ,660 Retained earnings 55,227 49 ,651 Treasury stock: 1,241 and1 ,211 shares at 2025 and 2024, respectively (45,043) (40,150) Accumulatedo ther comprehensive loss (110) (168) Total stockholders’equity 20,415 19 ,001 Total liabia lities and stockholders’equity $ 36,299 $ 34 ,409 See accompanying Notes to Consolidated Financial Statements. 49
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APPLIED MATERIALS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY (In millions, except per share amounts) Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income (Loss) TotalShares Amount Shares Amount Balance at October 30, 2022 844 $ 8 $ 8 ,593 $ 37 ,892 1 ,173 $ (34,097) $ (202) $ 12,19 4 Net income —— — 6,856 — — — 6,856 Other comprehensive income (loss), net of tax —— — —— — (15) (15) Dividends declared ($1.22 per common share) —— — (1,022) —— — (1,022) Share-based compensation —— 490 —— — — 490 Net issuance under stock plans 7— 48 —— — — 48 Common stock repurchases (18) — — — 18 (2,202) — (2,202) Balance at October 29, 2023 833 $ 8 $ 9 ,131 $ 43 ,726 1 ,191 $ (36,299) $ (217) $ 16,34 9 Net income —— — 7,177 — — — 7,177 Other comprehensive income (loss), net of tax —— — —— — 494 9 Dividends declared ($1.52 per common share) —— — (1,252) —— — (1,252) Share-based compensation —— 577 —— — — 577 Net issuance under stock plans 5 — (48) —— — — (48) Common stock repurchases (20) — — — 20 (3,851) — (3,851) Balance at October 27, 2024 818 $ 8 $ 9 ,660 $ 49 ,651 1 ,211 $ (40,150) $ (168) $ 19,00 1 Net income —— — 6,998 — — — 6,998 Other comprehensive income (loss), net of tax —— — —— — 58 58 Dividends declared ($1.78 per common share) —— — (1,422) —— — (1,422) Share-based compensation —— 660 —— — — 660 Net issuance under stock plans 5 — 13 —— — — 13 Common stock repurchases (30) — — —3 0 (4,893) — (4,893) Balance at October 26, 2025 793 $ 8 $ 10 ,333 $ 55 ,227 1 ,241 $ (45,043) $ (110) $ 20,41 5 See accompanying Notes to Consolidated Financial Statements. 50
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FiscalY ear 2025 2024 202 3 Cash flows from operating activities: Net income $ 6,998 $ 7 ,177 $ 6 ,856 Adjud stments required to reconcile net income to cash provided by operating activities: Depreciation and amortization4 35 392 51 5 Restrucrr turing charges 179 —— Deferred income taxes6 39 (633) 24 (Gain) loss and impairments on investments, net( 792) (15) (16) Share-based compensation 668 577 49 0 Other 31 62 56 Changes in operating assets and liabilities, net of amounts acquired: Accounts receivable 49 (69) 903 Inventories (494) 304 20 7 Other current and non-current assets (119) 287 (48) Accounts payable and accruedrr expenses 307 281 (138) Contract liabia lities (283) (126) (167) Income taxes payable 250 38 9 (20) Other liabia lities 90 51 38 Cash provided by operating activities 7,958 8 ,677 8 ,700 Cash flows from investing activities: Capia tal expenditures (2,260) (1,190) (1,106) Cash paid for acquisitions, net of cash acquired (29) —( 25) Proceeds from asset sale 33 —— Proceeds from sales and maturities of investments 5,528 2 ,451 1 ,268 Purchases of investments (6,054) (3,588) (1,672) Cash used ini nvesting activities (2,782) (2,327) (1,535) Cash flows from financing activities: Debt borrowings, net of issuance costs 991 694 — Debt repayments (700) —— Proceeds from commercial paper 503 401 991 Repayments of commercial paper (502) (400) (900) Proceeds from common stock issuances 261 243 22 7 Common stock repurchases (4,895) (3,823) (2,189) Tax withholding payments for vested equity awards (248) (291) (179) Payments of dividends to stockholders (1,384) (1,192) (975) Payments of debt issuance costs (3) — — Repayments of principals on finance leases — (102) (7) Cash used in financing activities (5,977) (4,470) (3,032) Increase (decrease) in cash, cash equivalents and restricted cash equivalents (801) 1,880 4,133 Cash, cash equivalents and restricted cash equivalents — beginning of period 8,113 6 ,233 2 ,100 Cash, cash equivalents and restricted cash equivalents — endo fp eriod $ 7,312 $ 8 ,113 $ 6 ,233 Reconciliationo f cash, cash equivalents, and restricted cash equivalents Cash and cash equivalents $ 7,241 $ 8 ,022 $ 6 ,132 Restricted cash equivalents included in deferred income taxes ando ther assets 71 91 101 Total cash, cash equivalents, and restricted cash equivalents $ 7,312 $ 8 ,113 $ 6 ,233 APPLIED MATERIALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued) (In millions) 51
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FiscalY ear 2025 2024 202 3 Supplu emental cash flow information: Cash payments for income taxes $ 1,504 $ 957 $ 1 ,006 Cash refunds from income taxes $ 90 $ 15 $ 53 Cash payments for interest $ 239 $ 205 $ 20 5 See accompanying Notes to Consolidated Financial Statements. APPLIED MATERIALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued) (In millions) 52
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Note 1 Summary of Significant Accounting Policies and Recently Adopted Accounting Standards Summary of Significff ant Accounting Policies Principli es of Consolidatdd ion and Basis of Presentation Thec o nsolidated financial statements include the accounts of Applied Materials, Inc. and its subsu idiaries (we, us, and our) afteff r eliminationo f intercompany ba lances and transactions. All references to a fiscaly ear appl y to our fiscaly ear which ends on the last Sunday in October. Fiscal 2025, 2024 and 2023 each contained 52 weeks. Eachf iscal quarter of 2025, 2024 and 2023 contained 13 weeks. Certain prior-year amounts have been reclassified to conform to current-year presentation. Use of Estimates The preparationo f financial statements in conformity witha ccounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that af feff ct the amounts reported in the financial statements and accompanying notes. Actual results couldd iffer materially fromt hosee stimates. On an ongoing basis, we evaluate our estimates, including those related to standalone selling price (SSP) related to revenue recognition, accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, usefulff lives of intangible assets and prop erty, pl ant and equipment, fair values of share-based awards, warranty, and income taxes, among others. We base our estimates onh istorical experience ando n various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about thec arrying values of assets and liabia lities. Cash Equivalents All highly liquid investments with a remaining maturity of three monthso r less at the time of purchase are classified as cashe quivalents. Cashe quivalents consistp rimarily of investments ini nstitutional money market funds, treasury bi lls and investmentg rade commercial paper. Investments All of our investments, except equityi nvestments, arec lassified as availabla e-for-sale at the respective balance sheet dates. Investments classified as availabla e-for-sale are measured and recorded in the Consolidated Balance Sheets at fair value, and unrealized gains and losses, net of tax, are reported as a separate component of other comprehensive income. Interest earned on cash and investments, as wella s realized gains and losses on sale of securities, are included ini n terest ando ther income, net in the Consolidated Statements of Operations. Our equity investments with readily determinable values consist of publ icly t raded e quity securities. These investments are measured at fair value using quoted prices for identical assets in an active market. Privately held equityi nvestments without readily determinable fair value are measured at cost, less impairment, adjud sted by ob servable pricec hanges. Adjud stments resulting from impairments and obs ervable price changes are recorded ini n terest ando ther income, net in the Consolidated Statements of Operations. Investments with remaining effeff ctive maturities of 12 monthso r less fromt he balance sheet date arec lassified as short- term investments. Investments with remaining effeff ctive maturities of more than 12 months fromt he balance sheet date are classified as long-term investments. Fair Value Measurements Our financiala ssets are measured and recorded at fair value on a recurringb a sis, except for equity investments in privately h eld companies. These e quityi nvestments are generally accounted for under the measurement alternative, defined as cost, less impairments, adjud sted for subsu equent observable pricec hanges and are periodically assessed for impairment when events or circumstances indicate that a decline in value mayh a v eo c curred. Our nonfinff ancial a ssets, sucha s goodwill, intangible assets, and prop erty, pl ant and equipment, are recorded at cost and are assessed for impairment at least annually for goodwill, or whenever events or changes in circumstances indicate that thec arrying value of an asset may not be recoverabla e. We use the following hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels andb ases thec ategorization within the hierarchy upon the lowest level of input that is availabla e and significant to the fair value measurement: • Level1— Quoted prices in active markets for identical assets or liabia lities; APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 53
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• Level2— Inputs other than Level 1 that are observable, either directly or indirectly, sucha s quoted prices for similar assets or liabia lities, quoted prices inm arkets that ar e nota ctive, or other inputs that ar e observable or can be corroborated by observable market data for subsu tantially the full term of the assets or liabia lities; and •L evel 3 — Unobservable inputs that are supporu tedb y little orn o marketa ctivity and that ar e significant to the fair value of the assets or liabilities. In determining the fair value of our debt securities investments, we use pricing information from pricing services that value securities based on quot ed marketp rices and models that utilize observable market inputs. In thee v e nt a fair value estimate is unavailabla e from a pricing service, we generally obtain non-binding p rice quotes from brokers. In addition, to validate pricing informationo b tained from pricing services, we periodically perform supplu emental analysis on a sample of securities. We review any significant unanticipated differences identified through this analysis to determine the appropriate fair value. As of October 26, 2025, subsu tantially all of our availabla e-for-sale, short-term, and long-term investments were recognized at fair value that was determined based upon quoted prices or other observable inputs. Our equity investments with readily determinable values are measured at fair value using quoted prices for identical assets in an a ctive market, and thec hanges in fair value of these e quityi nvestments are recognized in the consolidated statements of operations. Inventories Inventories are stated at the lower of cost orn et realizable value, with approximate cost determined on a first-in, first-out (FIFO) basis. Wea d just inventory carrying value for estimated obso lescence e qual to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. We fully write down inventories and noncancelable purchase orders for inventory d eemed obsolete. We perform periodic reviews of inventory items to identify excess inventories onh a n db y comparing on-hand ba lances to anticipated usage using recent historical a ctivity as wella s anticipated or forecastedd e mand. If estimates of customer demand d iminish further or market conditions become less favorable than those projected by us, additional inventory adjud stments mayb e required. Property,tt Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is provided over thee stimatedu sefulff lives of the assets using the straight-line method. Estimatedu s efulff lives of certain assets forf i nancial reporting purposes are as follows: buildings and improvements, 3 to 30 y ears; demonstration and manufactff urtt ing equipment, 5 to 8y ears; software,3 to 5 years; and furniture, fixtures ando ther equipment, 3 to 5 years. Land improvements are amortized over the shorter of 15 y ears or their estimated usefulff life.ff Leasehold improvements are amortized over the shorter of fivey ears or the lease term. Government Assistance We receive gov ernment assistance from various dom estic and foreign governments in the form of cash grants or refundable tax credits. These arrangements incentivize us to continue grow ing our capitali nvestments and research and development activities. Government incentives generally contain conditions that must be meti n order for the assistance to be earned. We recognize the incentives when there is reasonable assurance that we will comply with all conditions specified in the incentive arrangement and the incentive will be received. We record capia tal expenditure related incentives as an offsff et to the associated property, pl ant and equipment, net within our Consolidated Balance Sheets and recognize a reduction to depreciation expense over the usefulff lifeff of the corresponding acquired asset. We record incentives related to operating activities as a reduction to expense in the same line item on the Consolidated Statements of Operations as thee xpenditure for which the grant is intended to compensate. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 54
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Acquisiii tions We account for the acquisition of a business using the acquisition method ofa ccounting. Our methodology for allocating the purchase price relating to purchase ac quisitions is determined through establa ished andg e n erally acceptedv aluation techniques. Wea l locate the fair value of the purchase considerationo fo u r acquisitions to the tangible assets, liabia lities, and intangible assets acquired, including in-process technology, ba sedo n their estimated fair values. Goodwill i s measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiabla e intangible assets acquired less liabia lities assumed. Wea ssign assets acquired (including goodwill) and liabia lities assumed to oneo r more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multipl e reporting uni ts. If the products obtained in an a cquisition are assigned to multipl e reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process. The value assigned to intangible assets is usually basedo n estimates and judgments regarding expectations for the success and lifec y c l eff of producd ts and technology acquired. Goodwill and Intangible Assets Goodwill i s not amortized but is reviewed for impairment annually during the fourth qua rter of eachf i scaly ear and whenever events or changes in circumstances indicate that thec arrying value of an asset may not b e recoverabla e. The process of evaluating the potential impairment of goodwill requires judgment. When reviewing goodwill for impairment, we first perform a qualitative assessment to determine whether iti s more likely than not that the fair value of a reporting unit is less than its carrying value. In performing a qualitative assessment, we consider business conditions and otherf a ctors including, but not limited to (i) adverse industryo rrr economic trends, (ii) restructurt ing actions and lower projections that may impact future operating results, (iii) sustained de cline in share price, and (iv) overallf i nancial performance ando ther events affeff cting the reporting units. If we conclude that iti s more likelyt h an not that the fair value of a reporting unit is less than its carrying amount, then a quant itative impairment test is performed by estimating the fair value of the reporting unit and comparing it to its carrying value. If thec arrying value of a reporting unit exceeds its fair value, we would record an impairment charge equal to thee xcess of thec arrying value of the reporting unit over its fair value. In the fourth qua rter of fiscal 2025 , we perforff med a qualitative assessment to test goodwill for all of our reporting units for impairment. Basedo n this assessment, we determined that a quantitative impairment test was required for certain non- strategic businesses within our Corporate and Other category, p rimarily due to events related to thee x it of o ne such business during the quarter. As a result, we recognized goodwill imp airment charges of$ 4 1 million in general and administrative expenses in our Consolidated Statements of Operations. No goodwill impairment was recorded during fiscal2 024 and 2023. Intangible assets withf i nite lives are presented at cost, net of accumulated amortization, and are amortized over their estimatedu sefulff lives of 1 to 15 years using the straight-line method. Wee v a luate the usefulff lives of our intangible assets each reporting period to determine whether events and circumstances require revising the remaining period o f amortization. Intangible assets with infinite lives are not subju ect to amortization and consistp rimarily of in-process technology, which will be subju ect to amortization upon commercialization. If an in-process technology proj ect is abandoned, the ac quired technology attributable to the project will be written-off.ff Thec arrying values of our intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverabla e. The balances of our intangible assets were not materiala s of October 26, 2025 or October 27, 2024 and amortization expenses were not materialf orf iscal 2025, 2024 and 2023. Long-Lived Assets Long-lived assets aree valuated for impairment whenever events or changes in circumstances indicate the carrying value of an a sset or asset group may not b e recoverabla e. Wea s sess the recoverabia lity of the assets by comparing the undiscounted future cash flow expected to result fromt he use and eventual disposal of the assets to their respectivec arrying value. If not recoverabla e, we recognize an impairment loss to the excess of thec arrying value over the fair value of those assets and reduce the carrying value of the assets to their respective fair value. Fair value is determined by availabla e market valuations, when availabla e and appropriate, or by discounted cash flows. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 55
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Leases A contract contains a lease when we have the right to controlt he use of an identified asset for a period o f time in exchange for consideration. We lease certain facilities, vehicles and equipment under non-cancelable operating leases, manyo f which include options to renew. Options that are reasonably certain to be exercised are included in thec alculationo f the right- of-uff se asset and lease liabia lity. Our finance leases are those that contain a purchase option which we are reasonably certain to exercise at thee n do f the lease term. Our leases do not contain residual value guarantees or significant restrictions that impact the accounting for leases. As implicit rates are nota vailabla e for the leases, we use the incremental borrowing rate as of the lease commencement date in order to measure the right-of-use asset and liabia lity. Operating lease expense is generally recognizedo n a straight-line basis over the lease term. Finance lease ex pense is generally recognized on a straight-line basis over the lifeff of the underlying leased asset. We elected the practical expedient to account for lease and non-lease co mponents as a single lease co mponent for all leases. For leases with a term of one y ear or less, we elected not to record a right-of-use asset or lease liabia lity and to account for the associated lease payments as they become due. A majority of our lease arrangements are operating leases. The balances of our op erating leases right-of-use assets and liabia lities were not material a s of October 26, 2025 o r October 27, 2024. Operating lease co stf orf i scal 2025 , 2024 and 2023 was not material. Revenue Recognition from Contratt ctstt with Customers We recognize revenue when promised goods o r services are transferff red to a customer in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods o r services. We determine revenue recognition through the following five steps: (1) identificationo f the contract(s) with customers, (2) identificationo f the performff ance obligations in thec ontract, (3) determinationo f the transaction price, (4) allocationo f the transaction price to the performff ance obligations in thec ontract, and (5) recognitiono f revenue when, or as, a performance obligation is satisfied. Idendd tifying thec o ntratt ct(s) with customers.rr We selle quipment, services, and spare parts directly to our customers in the semiconductor, display and related industries. We generally consider written docum entation including, but not limited to, signed pu rchase orders, mastera greements, and sales orders as contracts provided that collection is probable. Collectabilityi s assessedb asedo n the customer’s creditworthiness determined by reviewing thec u stomer’s published credit and financial information, historicalp a yment experience, as wella s other relevant factors. Idendd tifying the perforff mance obligations. Our performance obligations include delivery of equipment, servicea greements, spare parts, installation, extended warranty and training. Our servicea greements arec onsidered one performance obligation and may include multiple goods and services that we provide to thec ustomer to deliver against a performance metric. Judgment is used to determine whether multiple promised goods or services in a contract shouldb e accounted for separately or as a group. Determine the transaction price. The transaction price for our contracts with customers may include fixed andv ariable consideration. We include v ariable consideration in the transaction price to thee x tent that iti s probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsu equently resolved. Allocate the transaction price to th e perforff mance obligations. A contract’s transaction price is allocated to eachd istinct performance obligation identifieff d within the contract. We generally estimate the standalone selling price of a distinct performance obligationb asedo nh i storical costp l u s an appropriate margin. For contracts with multipl e performff ance obligations, we allocate thec o ntract’s transaction price to eachp erformance obligationu s ing the relative standalone selling price of each distinct good or service in thec ontract. Recogniziii ng the revenue as p erforff mance obligations are satisfii ieff d. We recognize revenue from equipment and spares parts at a point in time when we have satisfied our performance obligation by transferff ring control of the goods to thec ustomer, which typically occurs at shipment or delivery.rr Revenue from service agreements is recognized over time, typically within 12 months, asc ustomers receive the benefits of services. The incremental costs to obtain a contracta re not material. Paymena t Terms. Payment terms vary by contract. Generally, the majority of payments are due within a certain number of days from shipment of goods or p erformance of service. The remainder ist ypically due upon customer technical acceptance. In certain circumstances we may received e p osits from customers for future deliverables. Our payment terms do not gen erally contain a significant financing component. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 56
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Shipping and Handling Costs We acco unt for shipping and handling activities related to contracts with customers asc o sts to fulfill our p romise to transferff the associated products. Accordingly, amounts billed for shipping and handling costs are recorded as a component of net revenue and costs as a component of cost of products sold. Warranty Our products are generally sold with a warranty for a 12-month period following installation. Parts and labora arec overed under the terms of the warranty agreement. We provide for thee s timated cost of warranty when revenue is recognized. Estimated warranty costs are determined by analyzing specific product, current and historical configff uration statistics and regional warranty supporu t costs. Our warranty obligation is affeff cted by product and component failure rates, material usage and labora costs incurred in correcting product failures during the warranty period. If actuat l warranty costs differ subsu tantially from our estimates, revisions to thee s timated warranty liabia lity wouldb e required. Quarterly warranty consumption is generally associated with sales that occurred during the preceding four quarters, and quarterly warranty provisions are generally related to thec urrent quarter’s sales. Wea lso sell extended warranty contracts to our customers which provide an extensiono f the standard warranty coverage periodo fu p to 2y ears. We receive payment at the inceptiono f thec o ntracta nd recognizes revenue ratably ovea r the extended warranty coveragep eriod, as thec ustomer simultaneously receives and consumes the benefits of thee xtended warranty. Our warranty reserves balances and thec omponents of changes in our warranty reserves were not material for all periods presented. Sales and Value Addeddd Taxesaa Taxes collected from customers and remitted to governmentala uthorities are presentedo n a net basis in the Consolidated Statements of Operations. Research, Developmo ent and Engineering Costs Research, development and engineering costs aree xpensed as incurred. Income Taxesaa We recognize a current tax liabia lity for the estimated amount of income tax payabl e on tax returns for the current fiscal year. Deferred tax assets and liabilities are recognized for the estimated future tax effeff cts of temporaryd irr fferences between the book and tax bases of assets and liabia lities. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. Deferred tax assets are offsff etb y a valuation allowance to thee x tent iti s more likely than not that they are not expected to be realized. Deferred tax assets and liabia lities are measured basedo n enacted tax rates that aree xpected to apply in the period in which the assets are realized or the liabia lities are settled. Deferred tax assets and liabia lities are ad jud sted for the effeff ct of a change in tax rates, laws, or statust when the change is enacted. We recognize tax benefits from uncertain tax pos itions onl y ifi ti s more likely than not that the tax pos ition will be sustained upon examination by the taxing authorities, basedo n the technical merits of the position. The tax benefits recognized from suchp o sitions are estimatedb asedo n the largest benefitt hat has a greater than 50% likelihood o f being realized upon ultimate settlement. Any changes inj u d gment related to uncertaint ax positions are recognized in our provision for income taxes in the quarter in which such changeo c curs. Interest andp e n alties related to uncertain t axp o sitions are recognized in our provision for income taxes. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 57
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Derivative Financial Instruments We use financial instruments, sucha s foreign currency forward and opt ion contracts, to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions typically expected to occur within 24 months. The purpose of our foreign currency management is to miti gate thee f feff ct of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. In certain cases, we also use interest rate swap or locka greements to hedge againstt he variability of cash flows due to changes in the benchmark interest rate of fixed rate debt. The terms of derivative financial instruments used for hedging purpos es are generally consistent with the timing of the transactions be ing hedged. Our derivative financial instruments are recorded as assets or liabia lities at fair value and reported gros s on our Consolidated Balance Sheets. However, under master netting agreements in place with our counterparr rties, we mayn et settle transactions of the same currency und er certain circumstances. For derivative instruments designated and qua lifying asc ash flowh e d ges, the gain or loss is reported as a component of accumulatedo ther comprehensive income (loss) (AOCI) in stockholders’ equity and is reclassified into earnings when the hedged transaction affeff cts earnings. Anyp ortion excluded from the assessment of effeff ctiveness is recognized in the same line as the hedged transactionb u t mayb e recognized in a different manner, e.g., amortized. If a hedged transactionb ecomes probable of not occurring according to the original strategy, the hedge relationship is discontinued, and we recognize the gain or loss on the associated derivative in earnings. For hedges of existing foreign currency deno minated assets or liabia lities, the gain or loss is recorded in earnings in the same period to offsff et the changes in the fair value of the assets or liabia lities being hedged. Foreigngg Currency As of October 26, 2025, all of our subsu idiaries use the United States dollar as theirf u nctional currency. Accordingly, assets and liabia lities of these subsu idiaries are remeasured using exchange rates in effeff cta t thee ndo f the period, except for non- monetary assets, sucha s inventories and prop erty, plant and equipment, which are remeasured using historical exchange rates. Foreign currency-denominated revenues and costs are remeasured using average exchange rates for the period, except for costs related to non-monetary assets and liabia lities, which are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in interest ando ther income, net in the Consolidated Statements of Operations as incurred. Concentrationso f Credit Riskii Financiali nstruments that pot entially subju ect us to significant concentrations of credit risk consistp rincipally of cash equivalents, investments, trade accounts receivable, andd erivative financiali nstruments used in hedging activities. We invest in a variety o f financial instruments, sucha s, but not limited to, commercialp a per, corporate bonds, municipal securities, United States Treasury and agency securities, and asset-backed and mortgage-backed securities, andb yp o l icy, limit the amount of credit exposure with anyo n e financiali nstitutiono r commercial issuer. Wea r ee xposed to credit-related losses in the event of nonperformance by counterparr rties to derivative financial instruments but do not expecta ny counterparr rties to fail to meet their obligations. We perform ongoing credit evaluations of our customers’financial condition andg e nerally require no collateral to secure accounts receivable. We maintain an allowance for potentially uncollectible accounts receivable basedo n our assessment of thec o llectabilityo f accounts receivable. We regularly review the allowance by considering factorss u cha s historical experience, credit quality, a ge of the accounts receivable balances, and current economic conditions that may affeff ct a customer’s ability t o pay. In addition, we utilize deposits and/or letters of credit to miti gatec redit risk when considered appropriate. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 58
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Recentlytt Adoptdd edtt Accounting Stii antt dards Fair Value Measurement of Equity Securities Subject to Contratt ctual Sale Restrictions. In June 2022 , the Financial Accounting Standards Board (FASB) issued an accounting standard update which clarifies how the fair value of equity securitiess u bju ect to contractuatt l sale restrictions is determined (Topic 820). The amendment clarifies that a contractuatt l sale restriction should not be considered inm easuring fair value. It also requires certain qualitative and quant itative disclosures related to equity securitiess ubju ect to contractuat l sale restrictions. Wea dopted this authoritative guidance in the first quarter of fiscal 2025. The adoptiono f this guidance did noth ave a material impact on our consolidated condensed financial statements. Improvm ements to Repore table Segment Discii losures. In November 2023, the FASB issued an accounting standard update to improve reportabla e segment disclosure requirements, primarily th rough enhanced disclosures about significant segment expenses (Topic 280). The standard requires interim and annual disclosure of significant segment expenses that are regularly provided to thec hief operating decision-maker( CODM) and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportabla e segment’s profitff or loss and assets that arec urrently required annually, requires disclosure of the position and title of the CODM, clarifieff s circumstances in which an entity can disclose multiple segment measures of prof itff or loss and contains o ther disclosure requirements. Wea d opted this authoritative guidance in the fourth quarter of fiscal2 025 and expanded the disclosures in ourn otes to thec onsolidated financial statements. See Note 15, Indusd tryrr Segment Operations, of the Notes to the Consolidated Financial Statements for further information. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 59
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Note 2 Earnings Per Share Basice arnings p er share is determined using the weighted average number of common shares outstanding du ring the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effeff ct of restricted stock units and employees’ stock pu rchase plan shares) outstanding du ring the period. Our net income has not been adjud sted for anyp eriodp resented for purposes of computing basic or diluted earnings per share due to ourn on-complex capital structurtt e. FiscalY ear 2025 2024 202 3 (In millions, except per share amounts) Numerator: Net income $ 6,998 $ 7 ,177 $ 6 ,856 Denominator: Weighted averagec ommon shares outstanding 804 827 84 0 Effeff ct of weighted dilutive restricted stock units and employees’stock purchase plan shares 4 7 5 Denominator for diluted earningsp er share 808 83 4 845 Basic earningsp er share $ 8.1 6$ 8.68$ 8.71 Diluted earnings per share $ 8.66 $ 8.61 $ 8.11 Potentially weighted dilutive securities —— — Excluded from thec alculationo f diluted earnings per share are securities attributable to outstanding restricted stock units where thec ombined exercise price and average unamortized fair value are greater than the average marketp rice of our common stock, and thereforff e their inclusion wouldb e anti-dilutive. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 60
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Note 3 Cash, Cash Equivalents and Investments Summary of Cash, Cash Equivalentstt and Investmett nts The following tabla es summarize our cash, cashe quivalents and investments by securityt ype: October 26, 2025, Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 1,4 1 9 $— $— $ 1 ,419 Cash equivalents: Money market funds* 2,193 — — 2,193 Bank certificates ofd e p osit and time deposits 180 — — 180 U.S. Treasury and agency securities 1,196 — — 1,196 Municipal securities 5 — — 5 Commercial paper, corporate bonds and medium-term notes 2,248 — — 2,248 Total cash equivalents 5,822 — — 5,822 Total cash and cash equivalents $ 7,2 4 1 $— $— $ 7 ,241 Short-term and long-term investments: Bank certificates ofd e p osit and time deposits $ 4$ —$ —$ 4 U.S. Treasury and agency securities 1,229 3 — 1,232 Non-U.S. government securities** 5 — — 5 Municipal securities 463 5 — 468 Commercial paper, corporate bonds and medium-term notes 848 6 — 854 Asset-backed and mortgage-backed securities 614 4 2 616 Total fixed income securities 3,163 18 23 ,179 Publu icly traded equity securities 1,288 824 22 ,110 Equityi nvestments in privatelyh eld companies 342 74 46 370 Total equityi nvestments 1,630 898 482 ,480 Total short-term and long-term investments $ 4,793 $ 916 $ 50 $ 5 ,659 Total cash, cash equivalents and investments $ 12,034 $ 916 $ 50 $ 12 ,900 _________________________ *Excludes $71 million of restricted cash equivalents invested inm oney market funds related to deferred compensation plans. **Includes Canadian provincial government debt. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 61
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October 27, 2024, Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 1,3 1 3 $— $— $ 1 ,313 Cash equivalents: Money market funds* 3,421 — — 3,421 Bank certificates ofd e p osit and time deposits 90 — — 90 U.S. Treasury and agency securities 1,394 — — 1,394 Municipal securities 19 — — 19 Commercial paper, corporate bonds and medium-term notes 1,785 — — 1,785 Total cash equivalents 6,709 — — 6,709 Total cash and cash equivalents $ 8,0 2 2 $— $— $ 8 ,022 Short-term and long-term investments: Bank certificates ofd e p osit and time deposits $ 1 3 $— $— $1 3 U.S. Treasury and agency securities 1,306 — 21 ,304 Non-U.S. government securities** 5 — — 5 Municipal securities 441 2 2 441 Commercial paper, corporate bonds and medium-term notes 803 4 2 805 Asset-backed and mortgage-backed securities 656 3 5 654 Total fixed income securities 3,224 9 11 3 ,222 Publu icly traded equity securities 543 185 5 723 Equityi nvestments in privatelyh eld companies 255 58 22 291 Total equity investments 798 243 27 1 ,014 Total short-term and long-term investments $ 4,022 $ 252 $ 38 $ 4 ,236 Total cash, cash equivalents and investments $ 12,044 $ 252 $ 38 $ 12 ,258 ________________________ *Excludes $91 million of restricted cash equivalents invested inm oney market funds related to deferred compensation plans. **Includes Canadian provincial government debt. During fiscal 2025, 2024 and 2023, interest income from our cash, cash equivalents and fixed income securities was $406 million, $486 million and $262 million, respectively. Maturities of Investmett nts The following tabla e summarizes thec ontractuat l maturities of our investments as of October 26, 2025: Cost Estimated Fair Value (In millions) Due in one year or less $ 1,275 $ 1,276 Duea fteff r one through fivey ears 1,274 1,287 No single maturity date* 2,244 3,096 Total $ 4,793 $ 5,659 _________________________ *Securities with no single maturity date include publ icly traded andp rivately h eld equity securities and asset-backed and mortgage-backed securities. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 62
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Gains and Losses on Investmett nts At October 26, 2025, gro ss unrealized losses related to our fixed income portfolff io were not material. We regularly review our fixed income portfolff io to identifyff and evaluate investments that have indicationso f possible impairment from credit losses or otherf a ctors. Factors considered in determining whether an unrealized loss is considered to be a creditl oss include: the significance of the decline in valuec ompared to the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that we w ill be required to sell the security prior to recovery. Credit losses related to availabla e-for-sale debt securities are recorded as an al lowance for creditl osses through interest ando ther income (expense), net. Any additional changes in fair value that are not related to creditl osses are recognized in accumulatedo ther comprehensive income (loss). During fiscal 2025 , 2024 and 2023, gro ss realized gains and losses related to our fixed income portfolff io were not material. During fiscal 2025, 2024 and 2023, we did not recognize material creditl osses and thee nding allowance for creditl osses was not material. Thec o mponents of gain (loss) on equityi nvestments recognized in the Consolidated Statements of Operations for each fiscaly ear were as follows: 2025 2024 2023 (In millions) Publu icly traded equity securities Unrealized gain $ 887 $ 332 $ 193 Unrealized loss (139) (287) (44) Realized gain on sales andd ividends 91 5 9 Realized loss on sales or impairment — (1)( 4) Equityi nvestments in privatelyh eld companies Unrealized gain 20 3 15 Unrealized loss (13) (17) (30) Realized gain on sales andd ividends 10 4 9 Realized loss on sales or impairment (35) (19) (121) Total gain (loss) on equity investments, net $ 821 $ 20 $ 2 7 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 63
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Note 4 Fair Value Measurements Assets Measured at Fair Value on a Recurring Basis The following tabla e presents our fair value hierarchy for our financiala ssets (excluding cashb alances) measured at fair value on a recurringb asis: October 26, 2025 October 27, 2024 Level 1 Level2 T otal Level1 L evel2 T otal (In millions) Assets: Availabla e-for-sale debt securityi nvestments Money market funds* $ 2,264 $ — $ 2 ,264 $ 3 ,512 $ — $ 3 ,512 Bank certificates ofd e p osit and time deposits — 1841 84— 1 03 103 U.S. Treasury and agency securities 2,109 319 2 ,428 2 ,684 14 2 ,698 Non-U.S. government securities —55 — 55 Municipal securities — 473 473 — 460 46 0 Commercial paper, corporate bonds and medium-term notes — 3,102 3 ,102 — 2 ,590 2 ,590 Asset-backed and mortgage-backed securities —6 166 16 — 654 654 Total availabla e-for-sale debt securityi nvestments $ 4,373 $ 4 ,699 $ 9 ,072 $ 6 ,196 $ 3 ,826 $ 10 ,022 Equityi nvestments with readilyd eterminable values Publu icly traded equity securities $ 2,110 $ — $ 2 ,110 $ 723 $ — $ 723 Total equityi nvestments with readily determinable values $ 2,110 $ — $ 2 ,110 $ 723 $ — $ 723 Total $ 6,483 $ 4 ,699 $ 11 ,182 $ 6 ,919 $ 3 ,826 $ 10 ,745 ______________________________ *Amounts as of October 26, 2025 and October 27, 2024 include $71 million and $91 million, respectively, invested in money market funds related to deferred compensation plans. Due to restrictions on the distributiono f these funds, they arec lassified as restricted cash equivalents and are included in deferred income taxes ando ther assets in the Consolidated Balance Sheets. We did noth ave any financial assets measured at fair value on a recurringb asis within Level 3 fair value measurements as of October 26, 2025 or October 27, 2024. Assets and Liabilities without Readily Determinable Values Measured on a Non-recurring Basis Our equity investments without readily determinable values consist of equityi nvestments in privately h eld companies. We elected the measurement alternative, defined as cost, less impairments, adjud sted for subsu equent observable price changes on a prospective basis for certain equityi nvestments without readily determinable fair values and are required to account for any subsu equent observable changes in fair value within the statements of operations. These investments arec lassified as Level 3 within the fair value hierarchy andp eriodically assessed for impairment whena n event or circumstance indicates that a decline in value mayh ave occurred. Impairment losses on equity investments in privately held companies, included in the above tabla e, were not material during fiscal2 025 and 2024 and were $121 million during fiscal 2023. These impairment losses are included ini n terest ando ther income (expense), net in the Consolidated Statement of Operations. Othertt Thec arrying amounts of our financiali nstruments, including cash and cash equivalents, restricted c ash equivalents, accounts receivable, commercial paper notes, and accounts payable and accruedrr expenses, approximate fair value due to their short maturities. At October 26, 2025, the aggregate principal amount of long-term senior unsecured notes was $6.5 billion, and the estimated fair value was $6.2 bi llion. At October 27, 2024, the a ggregate principal amount of long-term senior unsecured notes was $5.5 bi llion and thee s timated fair value was $5.1 bi llion. Thee s timated fair value of long-term senior unsecured notes is determined by Level 2 inputs and is basedp rimarily on quot ed marketp rices for the same or similar issues. See Note 9 of the Notes to the Consolidated Financial Statements for further detail of existing debt. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 64
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Note 5 Derivative Instruments and Hedging Activities Derivative Financial Instruments Wec onduct business in a number of foreign countries, with certain transactions denominated inl ocal currencies, sucha s the Japanea se yen, Israeli shekel, euro and Taiwanese dollar. We use derivative financiali nstruments, sucha s foreign currency forward and option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically within the next 2 4 months. The purpose of our foreign currency management is to miti gate thee f feff ct of exchange rate fluctuations on certain foreign currency deno minated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. We do not use derivative financiali nstruments for trading or speculative purposes. Derivative instruments and hedgin g activities, including foreign exchange and interest rate contracts, are recognized on the balance sheeta t fair value. Changes in the fair value of derivatives that do not qua lifyff for hedge accounting treatment are recognized currentlyi n earnings. All of our derivative financial instruments are recorded at theirf a ir value in other current assets or in accounts payable and accruedrr expenses. Hedges related to anticipated transactions are designated and docum ented at the inceptiono f the hedge as cashf l ow hedges and foreign exchanged erivatives are typically entered into once per month. Cashf l owh e d ges are evaluated for effeff ctiveness quarterly. The effeff ctive portiono f the gain or loss on these hedges is reported as a component of AOCI in stockholders’equity and is reclassified into earnings when the hedged transaction affeff cts earnings. The majority of thea fteff r-tax net income or loss related to foreign exchanged erivative instruments included in AOCI at October 26, 2025 is expected to be reclassified into earnings within 12 months. Changes in fair valuec ausedb y changes in tim e value of option contracts designated asc ashf lowh e d ges aree xcluded from the assessment of effeff ctiveness. The initial value of this excluded component is amortized on a straight-line basis over the lifeff of the hedging instrument and recognized in the financial statement line item to which the hedge relates. If the transactionb eing hedged is probable not to occur, we recognize the gain or loss on the associated financiali nstrument in the consolidated statement of operations. The amount recognized due to discontinuance of cashf l ow hedges that were probable of not occurringb y thee n do f the originally specified time period was not materialf orf i scaly ears 2025, 2024 or 2023 . Foreign currency forward contracts are generally used to hedge certain foreign currency denominated assets or liabia lities. Accordingly, changes in the fair value of these hedges are recorded in earnings to offsff et thec hanges in the fair value of the assets or liabia lities being hedged. As of October 26, 2025 and October 27, 2024, the total outstanding not ional amount of foreign exchange contracts was $2.3 bi llion and $2.0 bi llion, respectively. The fair values of foreign exchanged erivative instruments at October 26, 2025 and October 27, 2024 were not material. The gain (loss) on derivatives in cash flow hedgin g relationships recognized in AOCI for derivatives designated as hedging instruments were not materialf orf iscaly ear 2025, 2024 and 2023. Thee ffeff cts of derivative instruments, both those designated asc ash flowh e d ges and those that are not designated, on the Consolidated Statements of Operations were not materialf orf iscal 2025, 2024 and 2023. Credit Riskii Contingent Features If our credit rating were to fall below investmentg rade, we wo uldb e in violationo f credit risk contingent p rovisions of the derivative instruments discussed above, and certain counterparr rties to the derivative instruments could request immediate payment on derivative instruments in net lia bia lity positions. The a ggregate fair value of all derivative instruments with credit- risk related contingent featurt es that were in a net liability position was immaterial as of October 26, 2025 and October 27, 2024. Entering into derivative contracts with banks exposes us to credit-related losses in thee v e nt of the banks’ nonperformance. However, our exposure is not considered material. Note 6 Accounts Receivable, Net We have agreements with various financial institutions to sella ccounts receivable andd iscount pro missory notes from selected cu stomers. We sell our accounts receivable generally without recourse. From time to time, we also discount letters of crediti ssued by customers through various financiali nstitutions. The discounting of letters of credit depends o n many factors, including the willingness of financiali nstitutions to discount the letters of credit and thec ost of sucha rrangements. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 65
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We sold $501 million, $444 million and $67 9 million of accounts receivable during fiscal 2025 , 2024 and 2023 , respectively. We did not discount letters of credit issued by customers in fiscal 2025, 2024 and 2023. There was no discounting of promissory notes in eacho f fiscal 2025 , 2024 and 2023. Financing charges on the sale of receivables andd iscounting of letters of credit are included in interest expense in the accompanying Consolidated Statements of Operations and were not material for all years presented. We maintain an allowance for creditl osses for estimated losses resulting fromt he inability of our customers to make requiredp a yments. This allowance is basedo nh istorical experience, credit evaluations, specificc ustomer collection history and any customer-specific issues we have identified. Changes in circumstances, sucha s an unexpected material adversec hange in a major customer’s abilityt o meet its financial obligation to us or its paymentt r ends, may require us to further adjud st our estimates of the recoverabia lity of amounts due to us. Badd e bt expense and any reversals are recorded inm arketing and selling expenses in the Consolidated Statement of Operations. The balances of allowance for creditl osses and changes in allowance for creditl osses were not materialf orf iscal 2025, 2024 and 2023. We sell our produc ts principally to ma nufacff turers within the semiconductor industry.rr While we believe that our allowance for credit losses is adequate and represents our best estimate as of October 26, 2025, we continue to closely monitor customer liquidity and industryrr and economic conditions, which may result in changes to our estimates. Note 7 Contract Balances and Perforff mance Obligations Contratt ct Assets and Liabilities Contracta ssets primarily result from receivables for goods transferff red to customers where payment is conditional upon technical sign of fff and notj ust the passageo f time. Contract liabilities consist of u nsatisfied performance obligations related to advance payments received andb illings in excess of revenue recognized. Our contracta ssets and liabia lities are reported in a net positiono n a contract-by-contract basis at thee ndo f each reportingp eriod. Contracta ssets are generally classified asc u rrent and are included in Other Current Assets in th e Consolidated Balance Sheets. Contract liabia lities arec lassified asc urrent orn on-current basedo n the timing of when performance obligations will be satisfied and associated revenue is expected to be recognized. Contract balances att hee ndo f each reporting period were as follows: October 26, 2025 October 27, 2024 (In millions) Contracta ssets $ 281 $ 26 9 Contract liabia lities $ 2,566 $ 2 ,849 The increase in contracta ssets during fiscal2 025 was primarily due to an increase in unsatisfied performance obligations related to goods transferff red to customers where payment was conditional upon technical sign off.ff During fiscal 2025, we recognized revenue of approximately $2.4 billion related to contract liabia lities at October 27, 2024. Contract liabia lities decreased dur ing fiscal 2025 due to revenue recognized related to contract liabia lities at October 27, 2024, partially offsff etb yn ew billings for products and services for which there were unsatisfied performance obligations to customers, and revenue had not y et been recognized as of October 26, 2025. There were no credit losses recognized on our accounts receivabla es and contracta ssets during fiscal2 025 and 2024. Perforff mance Obligati ions As of October 26, 2025, the amount of remaining unsatisfied perforff mance obligations on contracts, primarily consistingo f written purchase orders received from customers, with an original estimated dur ation of one y ear or more was approximately $1.7 bi llion, of which approximately 53% is expected to be recognized within 12 months and the remainder is expected to be recognized within the following 24 months thereafteff r. We have elected the availabla e practical expedient to exclude the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 66
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Note 8 Balance Sheet Detail October 26, 2025 October 27, 2024 (In millions) Inventories Customer service spares $ 1,786 $ 1 ,742 Raw materials 2, 1,680007 Work-in-process 914 879 Finished goods Deferred cost of sales 229 21 7 Evaluation inventory 474 459 Manufactff urt ed on-hand inventory 505 444 Total finished goods 1,208 1 ,120 Totali nventories $ 5,915 $ 5 ,421 October 26, 2025 October 27, 2024 (In millions) Other Current Assets Prepaid income taxes and income taxes receivable $ 148 $ 12 0 Prepaid expenses ando ther 1,060 97 4 $ 1,208 $ 1 ,094 Usefulff Life October 26, 2025 October 27, 2024 (In years) (In millions) Property, Plant and Equipment, Net Land and improvements $ 558 $ 49 2 Buildings and improvements 3-30 2,3592,930 Demonstration and manufacff turing equipment5 -8 2,708 2 ,578 Furniture, fixtures and other equipmen 3t -5 782855 Construcrr tion in progress 1,460 898 Gross property, plant and equipment 8 7,109,511 Accumulatedd e preciation (3,901) (3,770) $ 4,610 $3 ,339 Depreciation expense was $389 million, $346 million and $471 million forf iscal 2025, 2024 and 2023, respectively. October 26, 2025 October 27, 2024 (In millions) Deferred Income Taxes and Other Assets Non-current deferred income taxes $ 1,233 $ 2 ,393 Operating lease right-of-use assets 509 375 Income tax receivables ando ther assets 806 314 $ 2,548 $ 3 ,082 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 67
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October 26, 2025 October 27, 2024 (In millions) Accounts Payable and Accrued Expenses Accounts payable $ 1,978 $ 1 ,570 Compensation and employee benefits 1,221 1 ,188 Warranty 346 364 Dividends payable 365 32 7 Income taxes payable 380 535 Operating lease liabilities, current 91 87 Restructurt ing reserve 165 — Other 7877 4 9 $ 5,333 $ 4 ,820 October 26, 2025 October 27, 2024 (In millions) Other Liabilities Defined andp ostretirement benefit plans $ 151 $ 14 2 Operating lease liabilities, non-current 404 259 Other 519 409 $ 1,074 $ 81 0 Government Assistantt ce Capia tal expenditure related incentives reduced gross property, plant and equipment, net by $1.2 bi llion as of October 26, 2025. Contra-depreciation expense was not material in fiscal2 025. Operating incentives recognized as a reduction to research, development and engineering expense was $31 million in fiscal 2025 . Capia tal expenditure related incentives reduced our income taxes payabla e 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 ando ther assets, in our Consolidated Balance Sheets. Note 9 Borrowing Facilities and Debt Revolving Creditdd Faciliii tiii es In September 2025, we entered into a $2.0 bi llion 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 bi llion for a total commitment of no more than $3.0 bi llion, subju ect to the receipt o f commitments from oneo r more lenders for any such increase ando ther customaryrr conditions. The 364-Day Credit Agreement is scheduled to expire in September 2026, provided, how ever, if any loans are outstanding on the maturity date, we may convert all orp a rt of such loans to term loans that will mature in September 2027, subju ect to payment of a fee by us and other customaryrr conditions. The 364-Day Credit Agreement provides for unsecured bor rowings that bear interest for each advance at oneo f two ratess elected by us, plus an applicable margin, whichv aries 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 bi llion 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 bi llion, subju ect to the receipt of commitments from oneo r more lenders for any such increase ando ther customaryrr conditions. The Five-Year Credit Agreement is scheduled to expire in February 2030, unless extended as permittedu nder the terms of the agreement. The Five-Year Credit Agreement provides for borrowings that bear interest for each advance at oneo f two ratess e lected by us, plu s an applicable margin, whichv aries according to our publ ic debt credit ratings. The Five-Year Credit Agreement replaced our p rior $1.5 billion credit agreement, which wass cheduled to expire in February 2026. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 68
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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 Japanea se banks pu rsuant to which we mayb o rrow up to approximately $53 million in aggregate at a ny time. Our ability to borrow under these facilities is subju ect to bank approva l at the time of the borrowing request, and any advances will be at rates indexed to the banks’prime reference rate denominated in Japanea se yen. As of October 26, 2025 and October 27, 2024, no amounts were outstanding und er these revolving credit facilities. Short-ttt ertt mrr Commerciali Papera We have a short-term commercial pap er program under which we may issue unsecured commercialp a per notes up to a total of $4.0 bi llion. We increased the amount of commercial pap er notes we may issue to $4.0 bi llion in the fourth qua rter of fiscal 2025 , subsu equent to increasing the amount from $1.5 bi llion to $2.0 bi llion in the third qua rter of fiscal 2025 . The proceeds fromt he issuances of commercialp a per are used for general corporate purposes. At October 26, 2025, we had $10 0 milliono f commercial paper notes outstanding and recorded as short-term debt with a weighted-average interest rate of 4.07% and maturities of3 5d a y s , and as of October 27, 2024, we had $10 0 milliono f commercialp a per notes outstanding and recorded as short-term debt with a weighted-average interest rate of 5.06% and maturities of6 3d a y s. Senior Unsecured Notes In September 2025, we issued $550 million aggregate principal amount of 4.000% senior unsecured notes due 2031 and $450 million aggregate principal amount of 4.600% senior unsecured notes due 2036, in a registered public offeriff ng. In October 2025, we used ap o rtion of the net proceeds from the offeriff ng to repay the outstanding $70 0 million in aggregate principal amount of its 3.900% senior unsecured notes due October 1, 2025. The remaining net proceeds fromt he issuance of the senior unsecured notes are intended for general corporate purposes. Debt outstanding as of October 26, 2025 and October 27, 2024 was as follows: Principal Amount October 26, 2025 October 27, 2024 Effeff ctive Interest Rate Interest Pay Dates (In millions) Currentp ortiono f long-term debt: 3.900% Senior Notes Due 2025 $ — $ 700 3.944% April 1, October 1 Total currentp ortion of long-term debt $ —$ 7 0 0 Long-term debt: 3.300% Senior Notes Due 2027 $ 1,200 $ 1 ,200 3.342% April 1, October 1 4.800% Senior Notes Due 2029 700 700 4.844 % June1 5, December 15 1.750% Senior Notes Due 2030 750 750 1.792 % June1 , December 1 4.000% Senior Notes Due 2031 550 — 4.070 % January 15, July 15 5.100% Senior Notes Due 2035 500 500 5.127 % April 1, October 1 4.600% Senior Notes Due 2036 450 — 4.632 % January 15, July 15 5.850% Senior Notes Due 2041 600 600 5.879 % June1 5, December 15 4.350% Senior Notes Due 2047 1,000 1 ,000 4.361% April 1, October 1 2.750% Senior Notes Due 2050 750 750 2.773 % June1 , December1 6,500 5 ,500 Total unamortized discount (12) (10) Total unamortized debt issuance costs (33) (30) Total long-term debt $ 6,455 $ 5 ,460 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 69
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Note 10 Restructuring Charges Fiscii al 2025 Restructuring Plan In the fourth quarter of fiscal 2025, we approved a workforce reduction plan (Fiscal 2025 Restructurt ing Plan) to position us for continued grow tha s a more competitive and produc tive organiz ation and expect approxi mately 4% of our globa l workforce to be impacted under this plan. The majority of thec harges related to the Fiscal2 025 Restructurt ing Plan were recognized in the fourth quarter of fiscal2 025 and consist primarily of severance ando ther employment terminationb enefits to be paid in cash, ando ther non-cash related charges. Restructurt ing charges related to the Fiscal2 025 Restructurtt ing Plan were as follows: 2025 (In millions) Severance ando ther employee-related charges $ 154 Asset impairments 27 Total $ 181 Changes in restructurt ing reserves related to the Fiscal2 025 Restructurt ing Plan described above were as follows: Restructuring Charges Reserves (In millions) Balance as of October 27, 2024 $ — Restructurt ing charges 167 Consumptiono f reserves (2) Balance as of October 26, 2025 $ 165 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 70
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Note 11 Stockholders’Equity, Comprehensive Income andS hare-Based Compensation Accumulated Othett r Comprehensive Income (Loss) Changes in the components of accumulatedo ther comprehensive income (loss) (AOCI), net of tax, were as follows: Unrealized Gain (Loss) on Investments, Net Unrealized Gain (Loss) on Derivative Instruments Qualifyiff ng as Cash Flow Hedges Defined and Postretirement Benefit Plans Cumulative Translation Adjud stments Total (In millions) Balance at October 30, 2022 $ (75) $( 52) $( 88) $ 13 (202) Other comprehensive income (loss) before reclassifications 16 (44) 17 — (11) Amounts reclassified out of AOCI 9 (22) 9 — (4) Other comprehensive income (loss), net of tax 25 (66) 26 — (15) Balance at October 29, 2023 $ (50) $( 118) $( 62) $ 13$ (217) Other comprehensive income (loss) before reclassifications 34 28 — — 62 Amounts reclassified out of AOCI 9 3 (25) —( 13) Other comprehensive income, net of tax 43 31 (25) —4 9 Balance at October 27, 2024 $ (7) $ (87) $( 87) $ 13$ (168) Other comprehensive income (loss) before reclassifications 17 58 — —7 5 Amounts reclassified out of AOCI 1 (5)( 13) — (17) Other comprehensive income (loss), net of tax 18 53 (13) —5 8 Balance at October 26, 2025 $ 11 $ (34) $( 100) $ 13$ (110) The tax effeff cts onn et income of amounts reclassified from AOCI were not material for the fiscal 2025, 2024 and 2023. Stocktt Repuee rchase Program In March 2025, our Boardo fD i rectors approved a common stock repurchase program a uthorizing $10.0 bi llion in repurchases, which supplu emented the previous $10.0 bi llion authorization approved in March 2023. At October 26, 2025, approximately $14.0 billion remained availabla e for future stock repurchases under the repurchase program. The following tabla e summarizes our stock repurchases, including and excluding excise tax, for eachf iscaly ear: 2025 2024 2023 (In millions, except per share amounts) Shares of common stock repurchased 30 20 18 Cost of stock repurchased (including excise tax)* $ 4,893 $ 3 ,851 $ 2 ,202 Average price paid per share (including excise tax)* $ 190.27 $ 123.6 3$ 162.85 Cost of stock repurchased (excluding excise tax) $ 4,853 $ 3 ,823 $ 2 ,189 Average price paid per share (excluding excise tax) $ 122.8 9$ 188.87$ 161.54 (*) Stock repurchase amounts include the 1% surcharge on stock repurchases under the Inflation Reduction Act’s excise tax. This excise tax is recorded in equity and reduces the amount availabla e under the repurchase program, as applicable. We record common stock repurchased and held as treasury stock under thec ost method using the first-in, first-out (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition costa rec redited to additional paid in capital. If we reissue treasury stock at an amount below our acquisition cost and additional paid in capitala ssociated withp rior treasuryrr stock transactions is insufficient to cover the difference between the ac quisition cost and the reissue price, this difference is recorded against retained earnings. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 71
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Dividends During fiscal 2025 , our Boardo fD i rectors declared one qua rterly cash dividend of $0.40 p er share and three quarterly cash dividends of $0.46 p er share. During fiscal2 024, our Board of Directors declared one quarterly cash dividend of $0.32 p er share and three quarterly cash dividends of $0.40 p er share. During fiscal 2023 , our Boardo fD i rectors declared one qua rterly cash dividend of $0.26 p er share and three quarterly cash dividends of $0.32 p er share. Dividends paid during fiscal 2025, 2024 and 2023 amounted to $1.4 billion, $1.2 billion and $975 million, respectively. Wec urrently anticipate that cashd ividends will continue to be paid on a quarterly basis, although the declaration of any future cashd ividend is at the discretiono f the Boardo f Directors and will depend on ou r financial condition, results of operations, capital requirements, business conditions ando ther factors, as wella s a determination by the Boardo fD irectors that cashd ividends are in the best interests of our stockholders. Share-Based Compensation We have a stockholder-approveda equity plan, the Employee Stock Incentive Plan (ESIP), which permits grants to employees of share-based awards, including stock opt ions, stocka p preciation rights, restricted stock, restricted stock units, performance share units andp erforff mance units. In addition, the plan provides for the automatic grant of restricted stock units to non-employee directors andp ermits the grant of share-based awards to non-employee directors and consultants. Share-based awards made u nder the plan mayb e subju ect to acceleratedv e sting under certain circumstances, including in thee v e nt of a change in control. In addition, we have an Omnibus Employees’StockP urchase Plan (ESPP), which enables eligible employees to purchase our common stock. We recognized share-based compensation expense related to share-based awards and ESPP shares. Thee f feff ct of share- based compensation on the results of operations and the related tax benefits for eachf iscaly ear were as follows: 2025 2024 2023 (In millions) Cost of products sold $ 158 $ 134 $ 180 Research, development, and engineering 259 219 179 Marketing and selling 85 72 55 General and administrative 166 152 76 Restructurt ing charges* (8) — — Total share-based compensation $ 660 $ 577 $ 490 Income tax benefits recognized $ 80 $ 73 $ 63 (*) Amount related to modificationo f share-based awards associated with the Fiscal2 025 Restructurt ing Plan. Thec osta ssociated with share-based awards ist ypically recognized over the awards’ service period for the entire award on a straight-line basis, adjud sting for estimated forfeiturtt es. However, in thec ase of share-based awards g ranted to certain members of senior management that allow for partiala ccelerated vesting in thee v e nt of a qualifyingff retirement basedo n age andy ears of service, thec o mpensation expense is recognizedo nce the individual meets thec o nditions for a qualifyingff retirement. Wec alculate estimated forfeiture rate on an annual basis, basedo nh i storical forfeiture activities. Thec o st associated with share-based awards that include p erformance and/or market goals, is recognized for each tranche over the service period. The cost of the portiono f share-based awards subju ect to performance goals is recognized basedo n an assessment of the likelihood that the applicable performance goals will be achieved, and thec ost of the portiono f share-based awards subju ect to market goals is recognized basedo n the assumption of 100% achievement of the goal. At October 26, 2025, we had $94 7 million int otal unrecognized co mpensation expense, net of estimated forfeiturtt es, related to grants of share-based awards u nder the ESIP and shares issued under the ESPP, which will be recognized ove r a weighted averag e period of 2.4 y ears. At October 26, 2025, there were 17 million shares availabla e for grant of share-based awards under the ESIP, and an additional 8 million shares availabla e for issuance under the ESPP. Stocktt Options Stock opt ions are rights to purchase, at future dates, shares of our common stock. There were no stock opt ionsg ranted during fiscal 2025, 2024 and 2023 and noo utstanding stock options at thee ndo ff iscal 2025. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 72
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Restricted Stoctt k Units,tt Restrictedtt Stock,tt Perforff marr nce Share Unitstt and Perforff marr nce Units Restricted stock units are converted into shares of our common stock upon v esting on a one-for-one b asis. Restricted stockh a s the same rights as other issued ando u tstanding shares of our common stocke x c e ptt hese shares generally have no right to dividends and are held in escrow until the awardv ests. Performance share units andp erformance units are awards that result in a payment to a grantee, generally in shares of our common stock on a one-for-one basis, ifp erformance goals, market goals and/or other vesting criteria ar e achieved or the awards o therwise vest. Restricted stock units, restricted stock, performance share units andp erformance units typically vest over three to foury ears andv e sting is usually subju ect to the grantee’s continued service with us and, in some cases, achievement of specified performance and/or market goals. Thec o mpensation expense related to share-based awards subju ect solely to tim e-based vesting requirements (Service- Based Awards) is determined using the market value of our common stock, adjud sted to exclude the present value of expected dividends dur ing the vesting period. The market value of our common stock is calculatedu s ing thec losing price of our common stock on the date of grant, or if the grant date is not a trading date, the averag e of thec losing prices on the trading dates immediately preceding and following the grant date. During fiscal 2025 , 2024 and 2023 , certain members of senior management were granted share-based awards that are subju ect to the achievement of certain l evels of specified marketa ndp erformance goals, in addition to time-basedv e sting requirements (Performance-Based Awards). The market goal for Performance-Based Awards granted dur ing fiscal 2025 , 2024 and 2023 is targeted levels of total shareholder return (TSR) relative to the TSR of thec ompanies in the Standard & Poor’s 500 Index. The performance goal for Performance-Based Awards granted during fiscal2 025 is non-GAAP economic profit, and the performance goal for awards g ranted dur ing fiscal2 024 and 2023 is non-GAAP operating margin. Each of the performance goal and market goal is weighted 50% and is measured over a three-year period. The number of Performance-Based Awards that mayv est in full afteff r three years ranges from 0% to 200% of the targeta mount. The awards become eligible to vest only if the goals are achieved and will vest only if the grantee remains employed by u s through each appl icable vesting date, subju ect to a qualifyingff retirement basedo n age andy ears of service. The awards provide for a partial vesting basedo n actuat l performance at thec onclusion of the three-year performance period in thee vent of a qualifyingff retirement. The fair value of the portion of the Performance-Based Awards subju ect to targeted levels of relative TSR is estimatedo n the date of grant using a Monte Carlo simulation model. Compensation expense is recognized based upo n the assumptiono f 100% achievement of the TSR goal and will not be reversed even if the threshold level of TSR is never achieved, and is reflected over the service period and reduced for estimated forfeiff tures. The fair value of the portion of the Performance-Based Awardss u bju ect to targeted levels of non-GAAP economic profit orn on-GAAP operating margini s estimatedo n the date of grant basedo n the market value of our common stock, adjud sted to exclude the present value of expected dividends during the vesting period. The market value of our common stock is calculated using thec losing price of our common stock on the date of the grant or, if the grant date is not a trading date, the average of the closing prices on the trading dates immediately preceding and following the grant date. If the performance goals are not meta s of thee n do f the performance period, no compensation expense is recognized and anyp reviously recognized compensation expense is reversed. Thee x pected co st is basedo n the portiono f the awards that is probable to vest and is reflected ove r the service period and reduced for estimated forfeitures. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 73
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The following tabla es summarize the assumptionsu sed for the valuationo f share-based awards for the periods presented: 2025 2024 2023 Service-Based Awards and the portion of Perforff mance- Based Awardss ubjectt o perforff mance goals: Grant date market value $138.24 - $223.91 $148.3 9 - $241.26 $104.22 - $143.9 7 Risk-free interest rate 3.56% - 4.52% 3.48% - 5.37% 3.64% - 5.48% Dividend yield 1.18% - 3.48% 0.72% - 2.62% 0.70% - 3.59% Fair value $134.61 - $220.09 $144.7 9 - $237.94 $102.09 - $141.3 3 2025 2024 2023 Portion of Perforff mance-Based Awardss ubject to market goals: Grant date market value $148.39$169.08 - $173.89 $109.37 Risk-free interest rate 4.24%4.10% - 4.30% 4.10% Dividend yield 0.74%0.95% - 0.86% 0.95% Expected volatility 40.99%42.65% - 43.35% 52.38% Fair value $183.40 $195.32 - $249.37 $162.72 A summary of the changes in restricted stock units, restricted stock, p erformance share units andp erformance units outstanding under our equity compensation plans during fiscal2 025 is presentedb elow: Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In millions, except per share amounts) Non-vested restricted stock units, restricted stock, performance share units andp erformance units at October 27, 2024 10 $ 129.31 Granted 5 $ 165.6 6 Vested (5) $ 126.1 5 Canceled (1) $ 139.50 Non-vested restricted stock units, restricted stock, performance share units andp erformance units at October 26, 2025 9 $ 148.43 2.3 ye ars $ 2,086 Non-vested restricted stock units, restricted stock, performance share units andp erformance units expected to vest 9 $ 148.23 2.2 y ears $ 2,029 At October 26, 2025, 0.7 million additional performance-based awards couldb e earned b ased upo n achievement of certain levels of specifieff dp erformance and/or market goals. A summary of the weighted-averageg rant date fair value per share of the granted restricted stock units, restricted stock, performance share units andp erforff mance units and total fair value vested awards for indicated periods is presentedb elow: 2025 2024 2023 (In millions, except per share amounts) Weighted average grant date fair value per share of awards granted $ 165.66 $ 149.20 $ 104.0 0 Total fair value of vested awards $ 647 $ 527 $ 36 7 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 74
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Omnibui s Employm ees’Stocktt Purchase Planll Under the ESPP, subsu tantially all employees mayp urchase our common stock through payroll deductions at a pricee qual to 85 p ercent of the lower of the fairm arket value of our common stock at the beginning o r endo f each 6-month pu rchase period, subju ect to certain li mits. Our purchasing cycles began in March and September of each of fiscal 2025 , 2024 and 2023. We issued 2 million shares in fiscal2 025 at a weighted average price of $131.75 p er share, 2 million shares in fiscal2 024 at a weighted average price of $147.38 p er share and2 million shares in fiscal2 023 at a weighted average price of $87.75 p er share, under the ESPP. Compensation expense is calculatedu s ing the fair value of thee m ployees’ purchase rights under the Black- Scholes model. Underlying assumptions used in the model are outlined in the following tabla e: 2025 2024 2023 ESPP: Dividend yield 1.19 0% .82 % 0.98 % Expected volatility 42.0 4% 0.1 % 39.4 % Risk-free interest rate 4.13 5% .03 % 5.29 % Expected lifeff (in years) 0.5 0.5 0.5 Weighted average estimated fair value $42.04 $52.31 $35.31 Note 12 Employee Benefit Plans Employm ee Bonus Plans We have v arious employee bonus pl ans. A discretionary bonus pl an provides for the distributiono f a percentageo f pre- tax income to our employees who are not participants in other performance-based incentive plans, up to a maximum percentage of eligible compensation. Other plans provide for bonuses to our executives ando ther key contributors basedo n the achievement of prof itaff bia lity and/or other specified perforff mancec r iteria. Charges under these plans forf i scal 2025 , 2024 and 2023 were $785 million, $837 million and $702 million, respectively. Define ed Benefite Pension Plans of Foreign Subsgg idiaries and Othett rP ostretirement Benefitse Several of our foreign subsu idiaries have de fined be nefit pension plans covering subsu tantially all of their eligible employees. Benefits under these plans are typically basedo ny ears of service and final average compensation levels. The plans are managed in accordance with appl icable local statutt es andp ractices. We deposit funds for certain of these plans with insurance companies, pension trusrr tees, government-managed accounts, and/or accruerr thee x pense for the unfunded po rtion of the benefit obligationo n our Consolidated Financial Statements. Our practice is to fund the various pens ion plans in amounts sufficient to meet the minimum requirements as establa ished b y applicable local governmental oversight and taxing authorities. Depending on the designo f the plan, local custom and market circumstances, the liabia lities of a plan may exceed the qualified plan a ssets. The differences between the a ggregate projectedb e nefit obligations and aggregate plan a ssets of these plans have been recorded as liabia lities by us and are included in other liabia lities and accruedrr expenses in the Consolidated Balance Sheets. The net funded statust andp eriodic benefit cost were not materialf orf iscal 2025, 2024 and 2023. Our investment strategy for our defined be nefit plans is to investp l a na ssets in a prudent manner, maintaining well- diversifiedp o rtfolff ios with the long-term objective of meeting the obligations of the plans as they co me due. Asset allocation decisions are typically made b y plan fiduciaries with input from our international pension committee. Our asset allocation strategy incorporates a sufficient equity exposure in order for the plans to benefit fromt hee x pected better long-term performance of equities relative to the plans’ liabia lities. We retain i nvestment managers, where approp riate, to manage the assets of the plans. Performance of investment managers is monitoredb yp l an fiduciaries with the assistance of local investment consultants. The investment managers make investment decisions within the guidelines set forth by pl an fiduciaries. Risk managementp ractices include diversification across asset classes and investment styles andp eriodic rebalancing toward target asset allocation ranges. Investment managers mayu se derivative instruments for effiff cient portfolff io management purposes. Asset return assumptions are derived b asedo n actuat rial and statistical methodologies, from analysis of long-term historical data relevant to the country in which eachp lan is in effeff cta nd the investments applicable to thec orresponding plan. The discount rate for eachp l an was derived b y reference to appropriate benchmark yiel d so nh i g hq u ality corporate bonds, allowing for the approximate duration of both plan obligations and the relevant benchmark yields. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 75
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Executive Defee rred Compensation Plansl We sponsor twou nfunded deferred compensation plans, the Executive Deferred Compensation Plan (Predecessor EDCP) and the 2016 Deferred Compensation Plan (2016 DCP) (forff merly known as the 2005 Executive Deferred Compensation Plan), under which certain employees may elect to defer a portiono f theirf ollowingy ear’s eligible earnings. The Predecessor EDCP was frozena s of December 31, 2004 such that no new deferrals couldb e made under the plan afteff r that date and the plan would qualifyff for “grandfatff her”r elief under Section 409A o f the Code. The Predecessor EDCP participant accounts continue to be maintained under the plan and credited with deemed interest. The 2016 DCP was originally implemented by us effeff ctive as of January 1, 2005, and amended and restated as of October 12, 2015, and is intended to comply with the requirements of Section 409A o f the Code. In addition, we also s ponsor a non-qualifiedd e ferred compensation plan a s a result of a previous acquisition. Amounts payable for all plans, including accrued deemed interest, totaled $43 6 million and $35 7 million at October 26, 2025 and October 27, 2024, respectively, which were included in other liabia lities in the Consolidated Balance Sheets. Note 13 Income Taxes Thec omponents of income before income taxes for eachf iscaly ear were as follows: 2025 2024 2023 (In millions) U.S. $ 833 $ 1 ,234$ 56 Foreign 9,215 7 ,319 6 ,482 Total $8 ,152 $7 ,716$ 9,271 Thec omponents of the provision for income taxes for eachf iscaly ear were as follows: 2025 2024 2023 (In millions) Current: U.S. $ 675 $ 1 ,254 $ 708 Foreign 366411 456 State 34 33 54 1,2181,120 1,653 Deferred: U.S. 382 (697) (255) Foreign 788 30 (61) State (17) (11) (42) 1,153 (678) (358) Total $ 975 $ 86 0$ 2,273 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 76
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A reconciliationb etween the statutoryt U.S. federal income tax rate and our actuatt l effeff ctive income tax rate for eachf iscal year is presentedb elow: 2025 2024 2023 Tax provision at U.S. statutoryt rate 21.0 %2 1.0 % 21.0 % Effeff ct of foreign operations taxed at various rates (7.3) (7.6) (8.2) Changes in prior years’unrecognized tax benefits — — (0.2) Resolutionso f prior years’income tax filings 0.2 (0.1) (0.1) Researcha ndo ther tax credits (1.3) (1.4) (1.6) Remeasurement of deferred tax assets in Singapore 7.1 — — Valuation allowance on corporate alternative minimum tax credits 4.4 — — Other 0.4 0.1 0.2 Total 24.5 % 12.0 % 11.1 % Our provision for income taxes and effeff ctive tax rate are af feff cted by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates ando ther income tax incentives. It is also affeff cted by events that vary from period to period, sucha s changes ini ncome tax laws and the resolution of prior years’income tax filings. Our effeff ctive tax rate forf iscal2 025 was higher than the prior fiscaly ear primarily due to a $659 million remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore and the recognitiono f a $407 millionv aluation allowancea g a inst deferred tax assets related to corporate alternative minimumt a x (CAMT) credits. These cr edits are not expected to be realized as a result of changes in the timingo f future tax deductions, following thee nactment of the One Big Beautifulff Bill Act. No prudent and feasible tax-planning strategies arec u rrently availabla e. The amount of the valuation allowance mayb e adjud sted in future quarters if estimates of future taxable income change. Our effeff ctive tax rate forf iscal2 024 was higher than fiscal 2023 p rimarily due to lower tax credits in fiscal 2024, pa rtially offsff etb yh i g her proportiono f pre-tax income in lower tax jurisdictions in fiscal 2024. In the reconciliation between the statutoryt U.S. federal income tax rate and thee f feff ctive income tax rate, the effeff ct of foreign operations taxed at various rates represents the difference betweena n income tax provision at the U.S. federal statutort yrr income tax rate and the recorded income tax provi sion, with the differencee x pressed as ap ercentageo f worldwide income before income taxes. This effeff ct is subsu tantially related to the tax effeff ct of pre-tax incomei nj u risdictions withl ower statutoryt tax rates. The foreigno p erations with the most significant effeff ctive tax rate impacta re in Singapore. The statutoryt tax rate for fisff cal 2 025 for Singapore is 17%. We have be en granted conditional reduced tax rates that expire beginning in fiscal 2030 , excluding pot ential renewal and subju ect to certain conditions with which we expect to comply. The tax benefits arising from these tax rates were $490 million or $0.61 p er diluted share, $393 million or $0.47 p er diluted share and $369 million or $0.44 per diluted share forf iscal 2025, 2024 and 2023, respectively. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 77
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Deferred tax assets and liabilities are recognized for thee stimated future tax effeff cts of temporaryd irr fferences between the book and tax bases of assets and liabia lities. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. Deferred tax assets are offsff etb y a valuation allowance to thee x tent iti s more likely than not that they are not expected to be realized. Thec omponents of deferred income tax assets and liabia lities were as follows: October 26, 2025 October 27, 2024 (In millions) Deferred tax assets: Corporate Alternative Minimum Tax $ 407 $ 41 0 Capitalized R&D expenses 295 217 Allowance for doubtful accounts 3 4 Inventory reserves and basis difference 145 127 Installation and warranty reserves 42 70 Intangible assets 225 977 Accruedrr liabia lities 29 24 Deferred revenue 61 72 Tax credits 677 592 Deferred compensation 265 261 Share-based compensation 34 44 Property, plant and equipment 192 101 Lease liabia lity 104 72 Other 50 79 Gross deferred tax assets 2,529 3,050 Valuation allowance (1,049) (569) Total deferred tax assets 1,480 2,481 Deferred tax liabilities: Right of use assets (105) (76) Undistributed foreign earnings (26) (23) Investments (133) — Total deferred tax liabilities (264) (99) Net deferred tax assets $ 1,216 $ 2 ,382 A valuation allowance is recorded to reflect thee s timated amount of net deferred tax assets that may not b e realized. Changes in the valuation allowance in eachf iscaly ear were as follows: 2025 2024 202 3 (In millions) Beginning balance $ 569 $ 530 $ 46 0 Increases 480 39 7 0 Ending balance $ 1,049 $ 569 $ 53 0 At October 26, 2025, we have corporate alternative minimum tax credit carryforwards of $40 7 million that are carried over until exhausted. Wea l so have state research andd e v elopment tax credit carryforwards of $67 7 million, including $62 4 milliono f credits that are carried over until exhausted and$ 42 million that arec arried over for 15 years andb e g in to expire in fiscal 2034. It is more likelyt han not that all tax credit carryforwards, net of valuation allowance, will be utilized. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 78
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We maintain liabilities for uncertain taxp ositions. These liabia lities involve considerablej u d gment and estimation and are continuouslym o nitoredb asedo n the best information availabla e. Gross unrecognized tax benefits arec lassified as non-current income taxes payable or as a reduction in deferred tax assets. A reconciliationo f the beginning and ending ba lances of gross unrecognized tax benefits in each fiscaly ear is as follows: 2025 2024 2023 (In millions) Beginning balance of gross unrecognized tax benefits $ 544 $ 510 $ 498 Lapsa es of statutt es of limitation (82) —— Increases int axp ositions for currenty ear 26 25 28 Increases int axp ositions for prior years — 13 — Decreases int axp ositions for prior years (1)( 4) (16) Ending balance of gross unrecognized tax benefits $ 487 $ 544 $ 51 0 Tax benefit for interest andp e n alties on unrecognized tax benefits forf i scal2 025 was $63 million and tax expense for interest andp e n alties on unrecognized tax benefits for fiscal2 024 and 2023 was $45 million and$ 34 million, respectively. The income tax liability for interest andp e n alties forf iscal 2025, 2024 and 2023 was $118 million, $181 million and $136 million, respectively, and was classified as non-current income taxes payabla e. Included in the balance of u nrecognized tax benefits forf i scal 2025 , 2024 and 2023 ar e $347 million, $397 million, and $386 million, respectively, of tax benefits that, if recognized, would affeff ct thee ffeff ctive tax rate. Our tax returns remain subju ect to examination by taxing authorities. These include U.S. returns forf i scal2 015 and later years, and foreign tax returns forf iscal2 011 and later years. The timingo f the resolution of income tax examinations, as wella s the amounts and timing of various taxp a yments that mayb ep a rt of the settlement process, is highly uncertain. This could cause fluctuations in our financial condition and results of operations. We continue to have ongoing negot iations with various taxing authorities throughout the year, and evaluate all domestic and foreign tax audit issues in the aggregate, along with thee xpirationo f applicable statuttt es of limitations. We believe iti s reasonably pos sible that the amount o f gross unrecognized tax benefits relatedp rimarily to foreign operations couldb e reduced by approximately $200 million in the next 12 months as a result of the resolutiono f tax matters or the lapsa e of statutt e of limitations. Note 14 Guarantees, Commitments and Contingencies Guarantees In the ordinaryrr course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiatedb y either us o r our subsu idiaries. As of October 26, 2025, the maximum potential amount of future payments that we couldb e required to make u nder these guarantee a greements was approximately $350 million. We have not recorded any liabia lity in connection with these guarantee agreements beyond that required to appropriately account for the underlying transactionb e ing guaranteed. We do not believe, basedo nh i storical experience and information currently availabla e, that it is probable that any amounts will be required to be paid under these guarantee agreements. Wea l so have agreements with various b anks to facilitate subsu idiary banking op erations worldwide, including ov erdraft arrangements, issuance ofb a n kg u arantees, and letters of credit. As of October 26, 2025, we have provided pa rent guarantees to banks for approximately $293 million to cover these arrangements. Legale Matters From time to time, we receive notification from thirdp arties, including customers and supplu iers, seeking indemnification, litigation supporu t, payment of money or oth er actions by u s in connection with claims made againstt hem. In addition, from time to time, we receive notificff ation fromt hirdp arties claiming that we mayb eo r are infringing or misusing their intellectuat l propertyo ro t her rights. We also are subju ect to various legal proceedings, gov ernment investigations or inquiries, and claims, both a sserted andu nasserted, that arise in the ordinary course of business. These matters are subju ect to uncertainties, and we cannot predictt he outcome of these matters, or governmental inquiries or proceedings that mayo ccur. Although the outcome of the above-described matters, claims and proceedings cannot be p redicted with certainty, we do not believe at this time that any of the above-described matters will have a material effeff ct on our consolidated financial conditiono r results of operations. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 79
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Since 2022, we have received multiple subpoenau s from government authorities requesting information relating to certain China customer shipments and export controls compliance, including fromt he U.S. Department of Justice, the U.S. Commerce Department Bureau of Industryrr and Security, and the U.S. Securities and Exchange Commission. Wea l so have received subpoenau s fromt he U.S. Department of Justice requesting information related to certain federal award applications and information submu itted to the federal government. We are cooperating fully with the U.S. government in these matters. We have continued to receive related subpoeu nas, as wella s requests for information, and may in the future receive additional related subpoenau s and requests for information from such or other government authorities. Any such matters are subju ect to uncertainties, and we cannot p redictt h e outcome, nor reasonably estimate a range o f loss orp e n alties, if any, relating to these matters. Note 15 Industry Segment Operations Our two reportabla e segments are: Semiconductor Systems and Applied Global Services (AGS). The Displayo p erating segment financial results were included in the Corporate and Other category ba lances below, as managementn o longer considers the Displayo p erating segment a significanto perating segment for separate reporting purposes. Segment information is presentedb ased upon ou r management organiz ation structurt e as of October 26, 2025 and the distinctive nature of each segment. Future changes to this internalf inancial structurt e may result in changes to our reportabla e segments. The Semiconductor Systemss e gment includess e miconductor capitale quipment to enable materials engineering steps including etch, rapida thermal proc essing, depos ition, chemical mechanicalp l anarization, metrology and inspection, wafer packaging, and ion implantation. The AGS segment provides integrated solutions to optimize equipment and fabp ea rformance and produc tivity, including spares, upgrades, services, 200 millimeter ando ther equipment and factory automation software for semiconductor ando ther products. Our President and Chief Executive Offiff cer is our chief operatingd ecision-maker( CODM). We derive the segment results directly from our internal management reporting system. The accounting policies we use to derive reportabla e segment results are subsu tantially the same as those used for external reporting purposes. Management measures the performance of each reportabla e segment based upo n several metrics including ord ers, net revenue ando p erating income. Our CODM regularly reviewss egment operating income to evaluate the perforff mance of, and to assign resources to, each of the reportabla e 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 produc ts ando p erating expenses from other operating segments that do not meet the requirements for a reportabla e segment. Corporate and Other also includes certain corporate function operating expenses that are not allocated to our reportabla e segments and are managed separately at the corporate level. In addition, we do not allocate to our reportabla e segments charges associated with restructurt ing actions, sucha s employee severancec osts and asset impairment charges, unless the restructurtt ing actionsp ertain to a specific reportabla e segment. Segment operating income also excludes interest income/expense and other financial charges and income taxes. Our CODM does not consider the unallocated costs inm easuring the performance of the reportabla e segments. APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 80
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Information for each reportabla e segment for and as of the endo f eachf iscaly ear were as follows: miconductor Systems Applied Global Services Corporate and OtherT otal (In millions, except percentages) 2025: Net revenue $ 20,798 $ 6 ,385 $ 1 ,185 $ 28 ,368 Costs of products sold 9,530 4 ,251 779 14 ,560 Gross profitff $ 11,268 $ 2 ,134 $ 406 $ 13 ,808 Gross margin 54.2 %3 3.4 %4 8.7 % Operating expenses: Research, development and engineering 3,042 12 6 402 3 ,570 Selling,g e neral and administrative 847 21 6 705 1 ,768 Restructurtt ing charges — — 1811 81 Operating income (loss) $ 7,379 $ 1 ,792 $ (882) $ 8,28 9 Operating margin 35.5 %2 8.1 %2 9.2 % Depreciation and amortization $ 192 $ 26 $ 217 $ 43 5 Capital expenditures $ 507 $ 57 $ 1 ,696 $ 2 ,260 Accounts receivable $ 3,733 $ 1 ,269 $ 183 $ 5 ,185 Inventories $ 3,444 $ 2 ,301 $ 170 $ 5 ,915 Goodwill $ 2,476 $ 1 ,032 $ 199 $ 3 ,707 miconductor Systems Applied Global Services Corporate and OtherT otal (In millions, except percentages) 2024 Net revenue $ 19,911 $ 6 ,225 $ 1 ,040 $ 27 ,176 Costs of products sold 9,379 4 ,088 812 14 ,279 Gross profitff $ 10,532 $ 2 ,137 $ 228 $ 12 ,897 Gross margin 52.9 %3 4.3 %4 7.5 % Operating expenses: Research, development and engineering 2,684 11 4 435 3 ,233 Selling,g e neral and administrative 867 211 719 1 ,797 Operating income (loss) $ 6,981 $ 1 ,812 $ (926) $ 7,86 7 Operating margin 35.1 %2 9.1 %2 8.9 % Depreciation and amortization $ 168 $ 22 $ 202 $ 39 2 Capital expenditures $ 425 $ 35 $ 730 $ 1 ,190 Accounts receivable $ 3,816 $ 1 ,297 $ 121 $ 5 ,234 Inventories $ 2,988 $ 2 ,306 $ 127 $ 5 ,421 Goodwill $ 2,460 $ 1 ,032 $ 240 $ 3 ,732 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 81
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Semiconductor Systems Applied Global Services Corporate and OtherT otal (In millions, except percentages) 2023 Net revenue $ 19,698 $ 5 ,732 $ 1 ,087 $ 26 ,517 Costs of products sold 9,456 3 ,911 766 14 ,133 Gross profitff $ 10,242 $ 1 ,821 $ 321 $ 12 ,384 Gross margin 52.0 %3 1.8 %4 6.7 % Operating expenses: Research, development and engineering 2,544 101 457 3 ,102 Selling,g e neral and administrative 819 191 618 1 ,628 Operating income (loss) $ 6,879 $ 1 ,529 $ (754) $ 7,65 4 Operating margin 34.9 %2 6.7 %2 8.9 % Depreciation and amortization $ 235 $ 31 $ 249 $ 51 5 Capital expenditures $ 381 $ 39 $ 686 $ 1 ,106 Accounts receivable $ 3,943 $ 1 ,111 $ 111 $ 5 ,165 Inventories $ 3,433 $ 2 ,073 $ 219 $ 5 ,725 Goodwill $ 2,460 $ 1 ,032 $ 240 $ 3 ,732 Semiconductor Systems revenue is recognized at a point in tim e. AGS revenue is recognized at a point in time for tangible goods sucha s spare parts and equipment, and ove r time for servicea greements. The majority of revenue recognized over time is recognized within 12 monthso f thec ontract inception. During fiscal 2025, goodw ill decreased primarily due to impairment charges recognized during the fourth quarter of fiscal 2025, partially offsff etb y an increase related to preliminary purchase accounting for an acquisition which was not material to our results of operations or to our balance sheet. During fiscal 2025 , two customers accounted for approximately 19% and 15% , respectively, o f our n et revenue. During fiscal 2024 , two customers accounted for approximately 12% and 11% , respectively, o f our n et revenue. During fiscal 2023 , two customers accounted for approximately 19% and 15%, respectively, of our net revenue. Net revenue for Semiconductor Systems by market for the periods indicated were as follows: 2025 2024 2023 Foundry, logic ando ther6 7 %6 8 % 77 % Dynamic random-access memory( DRAM) 26 %2 8 % 17 % Flash memory( NAND) 7 % 4 % 6 % 100 % 100 % 100 % APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 82
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For geographical reporting, revenue by geog raphic location is determined by the locationo f customers’facilities to which products were shipped and services were performed. Long-lived assets consistp rimarily of property, pl ant and equipment and right-of-use assets and are attributed to the geographic location in which they are located. Net revenue and long-lived assets by geographic region for and as of each fiscaly ear were as follows: 2025 2024 2023 (In millions) Net revenue: United States $ 3,063 $ 3 ,818 $ 4 ,006 China 8,529 10 ,117 7 ,247 Korea 5,608 4 ,493 4 ,609 Taiwan 6,857 4 ,010 5 ,670 Japana 2,273 2 ,154 2 ,075 Europe 962 1 ,443 2 ,152 Southeast Asia 1,076 1 ,141 758 Total outside United States 25,305 23 ,358 22 ,511 Consolidated total $ 28,368 $ 27 ,176 $ 26 ,517 October 26, 2025 October 27, 2024 (In millions) Long-lived assets: United States $ 5,071 $3 ,759 China 8 3 Korea 9 9 Taiwan 67 59 Japana 6 7 Europe 155 113 Southeast Asia 21 5 Total outside United States 266 196 Consolidated total $3 ,955$ 5,337 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 83
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INDEX TO EXHIBITS These Exhibits are numbered in accordance with the Exhibit Tabla e of Item 601 of Regulation S-K: 3.1 Amended and Restated Certificate of Incorporation of Applied Materials, Inc., as amended and restated through March 16, 2020 8-K 000-06920 3.1 3/16/202 0 3.2 Amended and Restated Bylaws of Applied Materials, Inc., as amended and restated through December 8, 2023 8-K 000-06920 3.2 12/13/202 3 4.1 Indenture, dated June 8, 2011, by and between Applied Materials, Inc. and U.S. Bank National Association, as Trustee 8-K 000-06920 4.1 6/10/2011 4.2 First Supplemental Indenture, dated June 8, 2011, by and between Applied Materials, Inc. and U.S. Bank National Association, as Trustee 8-K 000-06920 4.2 6/10/2011 4.3 Second Supplemental Indenture, dated September 24, 2015, by and between Applied Materials, Inc. and U.S. Bank National Association, as Trustee 8-K 000-06920 4.1 9/24/201 5 4.4 Third Supplemental Indenture, dated March 31, 2017, by and between Applied Materials, Inc. and U.S. Bank National Association, as Trustee 8-K 000-06920 4.1 3/31/201 7 4.5 Fourth Supplemental Indenture dated May 29, 2020, by and between Applied Materials, Inc. and U.S. Bank National Association 8-K 000-06920 4.1 5/29/202 0 4.6 Description of Registrant’s Securities Registered Under Section 12 of the Securities Exchange Act of 1934 10-K 000-06920 4.6 12/15/202 3 4.7 Indenture, dated as of June 11, 2024, by and between Applied Materials, Inc. and The Bank of New York Mellon Trust Company, N.A. 8-K 000-06920 4.1 6/11/202 4 4.8 Supplemental Indenture, dated as of June 11, 2024, by and between Applied Materials, Inc. and The Bank of New York Mellon Trust Company, N.A. 8-K 000-06920 4.2 6/11/202 4 4.9 Second Supplemental Indenture, dated as of September 18, 2025, by and between Applied Materials, Inc. and The Bank of New York Mellon Trust Company, N.A 8-K 000-06920 4.1 9/19/202 5 10.1 Form of Indemnification Agreement between Applied Materials, Inc. and Directors and certain officers 10-Q0 00-06920 10.1 5/23/202 4 10.2 Applied Materials, Inc. Profit Sharing Scheme (Ireland) S-83 33-45011 4.1 1/27/1998 10.3* Applied Materials Inc. Employee Financial Assistance Plan, amended and restated as of December 18, 2008 10-Q0 00-06920 10.58 3/3/200 9 10.4 Deed of Amendment to Applied Materials Profit Sharing Scheme, dated February 7, 2006, to amend Clause 20 of the Trust Deed thereunder 10-K 000-06920 10.48 12/12/2008 10.5 Deed of Amendment to Applied Materials Profit Sharing Scheme, dated February 7, 2006, to amend the definition of Eligible Employee in the First Schedule to the Trust Deed thereunder. 10-K 000-06920 10.49 12/12/2008 10.6* Form of Restricted Stock Unit Agreement for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan 10-Q0 00-06920 10.3 5/27/2021 10.7* Form of Restricted Stock Unit Agreement for Nonemployee Directors for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan 10-Q0 00-06920 10.4 5/27/2021 10.8* Form of Restricted Stock Agreement for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan 10-Q0 00-06920 10.3 8/23/201 2 Incorporated by Referencep y Exhibit No. Descriptionp Form File No. Exhibit No. Filing Dateg 84
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10.9* Applied Materials, Inc. Omnibus Employees’ Stock Purchase Plan, effective September 1, 2021 K 000-06920 10.2 3/16/2021 10.10* Offer Letter, dated August 14, 2013, between Applied Materials, Inc. and Gary E. Dickerson 10-Q0 00-06920 10.2 8/22/201 3 10.11* Form of Non-Qualified Stock Option Agreement for Employees for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended Q0 00-06920 10.4 8/22/201 3 10.12* Form of Performance Unit Agreement for use under the Applied Materials, Inc. Employee Stock Incentive Plan, as amended 10-Q0 00-06920 10.2 2/20/201 4 10.13* Applied Materials, Inc. Applied Incentive Plan, amended and restated effective September 7, 2023 10-K 000-06920 10.13 12/15/202 3 10.14* Applied Materials, Inc. 2016 Deferred Compensation Plan, as amended and restated on January 1, 2021 K 000-06920 10.15 12/16/202 2 10.15* Applied Materials, Inc. Employee Stock Incentive Plan, as amended and restated effective March 11, 202 1 8-K 000-06920 10.1 3/16/2021 10.16* Applied Materials, Inc. Senior Executive Bonus Plan, as amended and restated effective September 8, 2023 10-K 000-06920 10.16 12/15/202 3 10.17* Form of Performance Share Unit Agreement for members of the Executive Staff for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan 10-K 000-06920 10.17 12/15/202 3 10.18* Form of Restricted Stock Unit Agreement for members of the Executive Staff for use under the amended and restated Applied Materials, Inc. Employee Stock Incentive Plan 10-K 000-06920 10.18 12/15/202 3 10.19* Offer Letter, dated February 26, 2022, between Applied Materials, Inc. and Brice Hill 10-Q0 00-06920 10.1 5/26/202 2 10.20 Credit Agreement, dated as of February 24, 2025, among Applied Materials, Inc., Bank of America, N.A., as administrative agent, and the other lenders named therein 8-K 000-06920 10.1 2/27/202 5 10.21 Credit Agreement, dated as of September 25, 2025, among Applied Materials, Inc., Bank of America, N.A., as administrative agent, and the other lenders named therein 8-K 000-06920 10.1 9/26/202 5 10.22 Deed of Amendment, dated December 19, 2023, to the Trust Deed Constituting the Applied Materials Profit Sharing Scheme 10-Q0 00-06920 10.1 2/27/202 4 19.1 Insider Trading Policy 10-K 000-06920 19.1 12/13/202 4 21 Subsidiaries of Applied Materials, Inc.† Consent of Independent Registered Public Accounting Firm, KPMG LLP† 24 Power of Attorney (included on the signature page of this Annual Report on Form 10-K)† 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002† Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002† Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002‡ 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002‡ 97.1 Applied Materials, Inc. Compensation Recovery Policy, adopted on September 7, 2023 10-K 000-06920 97.1 12/15/202 3 101.INS XBRL Instance Document‡ 101.SCHX BRL Taxonomy Extension Schema Document‡ 101.CALX BRL Taxonomy Extension Calculation Linkbase Document‡ Incorporated by Referencep y Exhibit No. Descriptionp Form File No. Exhibit No. Filing Dateg 85
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101.DEF XBRL Taxonomy Extension Definition Linkbase Document‡ 101.LAB XBRL Taxonomy Extension Labea l Linkbase Document‡ 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document‡ 104 Cover Page Interactive Data File (formatted as inline XBRL) Incorporated by Referencep y Exhibit No. Descriptionp Form File No. Exhibit No. Filing Dateg * Indicates a management contract or compensatory plan or arrangement, as requiredb y Item 15(a)(3). †F iled herewith. ‡F urnished herewith. 86
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SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registranth as duly caused this report to be signed on its behalfb y the undersigned, thereunto duly authorized. APPLIED MATERIALS, INC. By: /s/ GARY E. DICKERSON Gary E. Dickerson Presidendd t, Chiefe Executive Offiff cer Dated: December 12, 2025 87
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POWER OF ATTORNEY KNOW ALL PER SONS BYT H ESEP R ESENTS, that each person whose signature appears below constitutt es and appoints Gary E. Dickerson, Brice Hill and TeriL ittle, jointly and severally, his orh er attorneys-in-fact, each with the power of subsu titution, for him orh er in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto ando ther documents in connection therewith, with the Securities and Exchange Commission, hereby ratifyingff and confirff ming allt hat each of said attorneys-in-fact, or hi ss u bsu titute or subsu titutes, mayd oo r cause to be done by virtue hett reof. ****** Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following personso n behalf of the registrant and in the capacities ando n the dates indicated. Title Date /s/ GARY E. DICKERSON President, Chief Executive Offiff cera nd Director (PrincipalE xecutive Offiff cer) December 12, 2025 Gary E. Dickerson /s/ BRICE HILL Senior Vice President, Chief Financial Offiff cer (PrincipalF inancial Offiff cer) December 12, 2025 Brice Hill /s/ ADAM SANDEAA RS Vice President, Corporate Controller and Chief Accounting Offiff cer (Principal Accounting Offiff cer) December 12, 2025 Adam Sanders /S/ THOMAS J. IANNOTA TI Thomas J. Iannotti Chairman of the Board December 12, 2025 /S/ JAMES R. ANDERSON James R. Anderson Director December 12, 2025 /S/ RANIAA BORKARKK Rani Borkar Director December 12, 2025 /S/ JUDY BRUNERUU Judy Brunerr rD irectorD ecember 12, 2025 /S/ XUN CHEN Xun Chen Director December 12, 2025 /S/ AART J. DE GEUS Aart J. de Geus Director December 12, 2025 /S/ ALEXANDER A. KARSNER Alexander A. Karsner Director December 12, 2025 /S/ KEVIN P. MARCH Kevin P. MarchD irectorD ecember 12, 2025 /s/ SCOTT A. MCGREGOR Scott A. McGregor Director December 12, 2025 88
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Thomas J. Iannott i Chairman of the Board of Applied Materials, Inc. Senior Vice President and General Manager, Enterprise Service s Hewlett-Packard Company (retired) James R. Anderso n Chief Executive Officer Co herent Corp. Rani B orkar President Azure Hardware S ystems and In frastructur e Microsoft Cor poration Judy Brune r Executive Vice Presi dent Administration and Chie f Financial O fficer SanDisk Cor poration (retired ) Xun (Eric) Che n Executive C hairma n ParityBit T echnologies, Inc . Aart J. de Geu s Executive Chair o f the Board o f Directors Synopsys, Inc . Gary E. Dickerso n President and Chie f Executive O fficer Applied Materials, Inc . Alexan der A. Karsne r Senior Strategis t X (parent com pany: Al phabet Inc. ) Kevin P. M arch Senior Vice President Chie f Financial O fficer T exas Instruments, Incorporated (retired ) Scott A. Mc Grego r President and Chief Executive Officer Broadcom Cor poration (retired) Gary E. Dickerso n President and Chief Executive Officer Brice Hil l Senior Vice President , Chief Financial Officer and Global Information Services Prabu Raj a President, Semicon ductor Pro ducts Grou p Timothy M. Dean e Senior Vice President, A pplied Global Services Teri Litt le Senior Vice President, Chie f Legal Officer and Cor porate Secretary Omkaram Nalamas u Senior Vice Presi dent, Chief T echnology Officer B OARD O F DIRECT O R S (as of December 31 , 2025) E XECUTIVE O FFICER S (as of December 31 , 2025)
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WWW.APPLIEDMATERIALS.COM 3050 BOWERS AVENUE PO BOX 58039 SANTA CLARA, CALIFORNIA 95054-3299 TEL: (408) 727-5555 © 2026 Applied Materials, Inc. Applied Materials, the Applied Materials logo, and product names so designated are trademarks of Applied Materials, Inc. and/ or its affiliates in the U.S. and other countries. Third party trademarks mentioned are the property of their respective owners. All rights reserved. Printed in the U.S.A. 01/2026