Applied Materials vs. Intel: Which Technology Stock Is a Better Buy in 2026?

When choosing a technology stock, you can weigh a chipmaker against a supplier of the equipment chipmaking requires. Which is the better buy, Applied Materials (NASDAQ:AMAT) or Intel (NASDAQ:INTC)?

Applied Materials sells the equipment and services that chipmakers use to fabricate semiconductors, and its fiscal year ends in late October. Intel designs and manufactures its own processors for PCs and data centers, and its fiscal year ends in late December. The two companies sit at different points in the semiconductor supply chain.

The case for Applied Materials

In its annual report for the fiscal year ended Oct. 26, 2025, Applied Materials describes itself as the leader in the materials engineering solutions used to produce virtually every semiconductor in the world.

That filing also shows a concentrated customer base, with two customers accounting for about 19% and 15% of net revenue. Customer concentration like this adds risk. In May 2026, Applied announced a new innovation partnership with Taiwan Semiconductor Manufacturing (NYSE:TSM) at its Silicon Valley EPIC Center to develop technologies for AI chips.

On Oct. 6, 2026, Applied also announced a collaboration with Intel, bringing teams together at the EPIC Center and Intel's R&D campus in Hillsboro, Oregon, to work on next-generation transistors and advanced packaging. The announcement gives no financial terms.

In fiscal 2025, revenue reached nearly $28.4 billion, up about 4.4% from the prior year. Net income was close to $7.0 billion, which works out to a net margin of roughly 24.7%, down from 26.4% in fiscal 2024. The dip came from taxes.

Pretax income rose about 14%, but the income tax provision more than doubled to $2.3 billion. The annual report attributes the jump to a $659 million effect from remeasuring deferred tax assets in Singapore and a $407 million valuation allowance on corporate alternative minimum tax credits.

The latest quarter looks stronger than the annual figures. In the quarter ended July 26, 2026, which Applied reported on Aug. 13, revenue rose 25% to $9.1 billion and net income rose 43% to $2.5 billion. The company returned $860 million to shareholders in the quarter through $440 million in share repurchases and $420 million in dividends.

For the fiscal fourth quarter, management guided to revenue of $10.25 billion, plus or minus $500 million.

As of its July 26, 2026 balance sheet, the debt-to-equity ratio, calculated from total debt, was approximately 0.3x, based on total debt of $6.5 billion and shareholders' equity of $25.6 billion.

The debt-to-equity ratio compares total debt to shareholders' equity, showing how much debt a company uses to fund its assets. The current ratio, which measures a company's ability to cover its short-term obligations with assets that can be converted into cash within a year, stood at roughly 2.4x on the same date. For fiscal 2025, Applied Materials generated nearly $5.7 billion in free cash flow: $8.0 billion in operating cash flow minus $2.3 billion in capital expenditures.

Free cash flow is the cash a company generates after accounting for the money spent to maintain or expand its physical assets.

The case for Intel

Intel describes itself in its annual report as an integrated device manufacturer, meaning it designs its own chips and predominantly makes them in its own factories.

The company is also working to expand Intel Foundry, which makes chips for other companies. In the second quarter of 2026, Intel Foundry reported $5.8 billion in revenue, up 31%, and an operating loss of $2.1 billion.

In August 2025, the U.S. government agreed to buy 433.3 million Intel shares at $20.47 each, a 9.9% stake costing $8.9 billion, and received a five-year warrant for an additional 5% stake, exercisable only if Intel ceases to own at least 51% of its foundry business. Intel said the government's ownership is passive, with no board representation.

In fiscal 2025, which ended Dec. 27, 2025, revenue was about $52.9 billion, down nearly 0.5% from the previous year. Intel reported a net loss attributable to Intel of $267 million, or a net margin of roughly -0.5%.

The loss was small because interest and other income of $3.3 billion offset a $2.2 billion operating loss, and that line included a $5.3 billion gain from divestitures, including the sale of Altera.

The company remains focused on returning to profitability while managing its large manufacturing footprint.

The second quarter of 2026, which ended June 27, looked very different. Revenue rose 25% to $16.1 billion, operating income was $1.8 billion, and Intel's non-GAAP earnings per share were $0.42.

Intel still reported a GAAP net loss attributable to Intel of $11.0 billion, or $2.16 per share. The cause was a $12.5 billion noncash loss from changes in the fair value of shares held in escrow under the U.S. government agreement, not a deterioration in operations. For the third quarter, Intel guided to revenue of $15.8 billion to $16.8 billion and non-GAAP earnings per share of $0.38.

As of June 27, 2026, Intel's debt-to-equity ratio, calculated using total debt of $50.5 billion and Intel stockholders' equity of $87.5 billion, was approximately 0.6x, and its current ratio was approximately 1.6x. At the end of 2025, those figures were about 0.4x and 2.0x.

Equity fell in the first half of 2026 partly because of $13.6 billion of escrowed share losses. In April, Intel reacquired Apollo's 49% stake in its Ireland fab joint venture for $14.2 billion in cash, which Intel said it would fund with cash on hand and about $6.5 billion of new debt.

By my calculation, Intel's 2025 operating cash flow of $9.7 billion fell short of the $14.6 billion it spent on property, plant and equipment, resulting in negative free cash flow of about $4.9 billion on that basis.

Intel's own non-GAAP adjusted free cash flow, which nets out government incentives and partner contributions, was negative $1.6 billion. Stock-based compensation, a noncash expense added back in the cash flow statement, was $2.4 billion, or roughly 25.1% of operating cash flow.

Risk profile comparison

Applied Materials operates in an industry that, according to its annual report, has historically been cyclical and subject to volatility in customer demand. China made up 28% of its revenue in the July 2026 quarter, down from 35% a year earlier, so U.S. export controls and trade policy remain a risk.

In February 2026, Applied agreed to pay $252.5 million to the U.S. Department of Commerce, according to its announcement, to resolve allegations that it reexported chipmaking equipment to Semiconductor Manufacturing International (SMIC) in China without required licenses between November 2020 and July 2022, according to the Bureau of Industry and Security's settlement documents.

The Justice Department and the SEC closed their related investigations without action. Under the settlement, Applied agreed to conduct two annual audits of its export compliance program for 2026 and 2027. The annual report also warns of cybersecurity incidents and of future impairment charges on goodwill or intangible assets.

Intel's turnaround depends on its foundry business, which lost money in the second quarter even as revenue grew.

Its annual report says leading-edge manufacturing requires substantial capital investment and a cost structure that needs manufacturing volumes beyond what Intel expects from its own products. Existing shareholders' ownership stakes have also been diluted.

In August 2026, Intel sold about 242.1 million new shares at $95 each, raising about $23 billion, including the underwriters' option, which they exercised in full; in September 2025, Nvidia (NASDAQ:NVDA) agreed to invest $5 billion in Intel stock at $23.28 per share. The government's warrants cover up to 241 million additional shares at $20 each, but they become exercisable only if Intel ceases to own at least 51% of its foundry business.

A shareholder also filed a derivative lawsuit in March 2026 against Intel's directors, the Department of Commerce and Commerce Secretary Howard Lutnick.

It alleges the directors breached their fiduciary duties by approving the August 2025 government agreement and seeks to invalidate the deal.

The case moved to federal court in April, defendants filed motions to dismiss in May, and the case remained pending as of Intel's July 2026 quarterly report.

Valuation comparison

Applied Materials has the higher profit margin, while Intel trades at a lower price-to-sales ratio and a higher forward price-to-earnings ratio.

Metric	Applied Materials	Intel
Forward P/E	42.2x	77.7x
P/S ratio	13.9x	10.6x

Valuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.

The Forward P/E ratio measures the current stock price against future earnings estimates, while the P/S ratio measures market value relative to sales over the past twelve months.

Which stock would I buy in 2026?

While Applied Materials looks like the better buy to me, I'd be a patient buyer and add shares over time instead of all at once.

The company sells the equipment chipmakers need as they expand, and its latest quarter showed revenue growing about 25%. Management also said it is raising its revenue expectations for its chip equipment business for calendar 2026. The company keeps turning a large share of its sales into profit and returns cash to shareholders.

The caveat is that chip equipment is a cyclical business. Applied's annual report says its industry has historically been cyclical, and China still accounted for a little more than a quarter of recent revenue, so export controls and the Commerce Department settlement remain in view.

The stock can also be volatile, so spreading purchases out makes sense to me.

Intel is the more difficult case. The second-quarter loss of about $11 billion was due to a noncash accounting charge, so I wouldn't read it as a collapse in the business.

But the foundry unit is still losing money, and factory spending is heavy. The company also sold $23 billion in new stock in August, diluting existing owners.

The shares trade well above the price the U.S. government paid for its stake. If the foundry business starts earning money, Intel deserves a fresh look.

Either one is best owned as part of a diversified portfolio of at least 50 companies that you plan to hold for years.

Mike Schwenk has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Applied Materials, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.