Can AMAT Lead the Display Market With Advanced OLED and AR/VR Push?

Applied Materials’ AMAT display business has rebounded in fiscal 2025 with year-over-year growth of 19.8%. In the fourth quarter of fiscal 2025, the display revenues grew 68.2% year over year as Applied Materials shipped a richer mix of advanced systems and increased prices broadly, as discussed in its transcript.

Traction in advanced form factors like thin, light, curved and flexible displays, and new use cases like augmented and virtual reality are at the core of AMAT’s display segment’s growth story. The gross margin of AMAT’s display business hit the highest mark in the past 25 years, coming in at 48.8%, growing 120 basis points year over year.

Throughout the year, AMAT benefited from expanding adoption of organic light-emitting diodes screens in smartphones, laptops, monitors and tablets. This growth is supported by Applied Materials’ MAX OLED technology, which is enabling OEMs to manufacture large OLED screens known for their superior brightness, flexibility, and durability on much larger glass panels.

AMAT has been leveraging its materials engineering expertise to grow in the advanced display technologies market and help the industry transition toward OLED and next-generation MAX OLED displays in 2026. On its fourth-quarter fiscal 2025 earnings call, the company reported that it will continue to focus on its existing strategy. For future growth, AMAT is innovating in the augmented reality (AR) and virtual reality (VR) space.

Applied Materials and Avegant are developing lightweight, everyday smart glasses using advanced waveguide and light-engine technology. These AI-powered glasses offer high brightness, low power use, visual clarity and comfort, keeping practicality in mind. AMAT is one of the most promising players ready to capitalize on the AR and VR display market, which is expected to witness a CAGR 35.6% to become a $8.2 billion market by 2028, per a report by MarketsAndMarkets.

How Competitors Fare Against AMAT Stock

Companies like Universal Display Corporation OLED and Kopin Corporation KOPN are two large players in the OLED market that develop phosphorescent OLED technology, micro-OLED displays and hold a vast portfolio of OLED-related patents.

Universal Display Corporation's strong patent portfolio has helped the company acquire several large customers, creating significant licensing revenues. Universal Display Corporation’s customers like Samsung, LG Display, BOE Technology, Visionox and Tianma have huge market share, which drives volumes.

Kopin Corporation specializes in ultra-high-brightness microdisplays for AR/VR, defense, enterprise, and industrial applications. While neither Universal Display Corporation nor Kopin Corporation directly competes with AMAT in equipment manufacturing, they hold patents for the underlying technology, making their customers direct competitors to AMAT.

AMAT’s Price Performance, Valuation and Estimates

Shares of Applied Materials have surged 74% in the past six months compared with the Zacks Electronics - Semiconductors industry’s appreciation of 23%.

AMAT 6-Month Performance Chart

From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 8.66X, lower than the industry’s average of 12.43X.

AMAT Forward 12-Month (P/S) Valuation Chart

The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 and 2027 earnings implies year-over-year growth of 1.17% and 19.91%, respectively. The estimate for fiscal 2026 has been revised downward in the past seven days, while the earnings estimate for 2027 has been revised upward in the past 30 days.

Applied Materials currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research