As the digital economy matures in 2026, many investors are choosing between the companies that build chipmaking tools and those that design the chips. Should you favor Applied Materials (NASDAQ:AMAT) or QUALCOMM (NASDAQ:QCOM)? Applied Materials provides the essential machinery used by factories to fabricate advanced semiconductors.
QUALCOMM designs the processors and wireless technologies that power modern smartphones and connected devices. Comparing these two reveals different ways to play the chip sector, each with unique financial strengths and geographic risks. Applied Materials provides equipment for semiconductor fabrication and services for fab performance.
Its technologies support manufacturing worldwide, but it relies heavily on a small group of chipmakers. In its latest annual report, filed for the fiscal year ended October 26, 2025, the company noted that two customers accounted for roughly 19% and 15% of its net revenue. Customer concentration like this adds a layer of risk to the business.
In fiscal 2025, revenue reached nearly $28.4 billion, up approximately 4.4% compared to the previous year. Net income was roughly $7 billion, which was a slight decrease from the $7.2 billion reported in fiscal 2024. Net margin for the period was 24.7%, indicating the company retains a significant portion of its sales after all expenses.
Applied Materials' October 2025 balance sheet shows a debt-to-equity ratio of about 0.3. This ratio compares total debt to shareholder equity, suggesting the company uses relatively little borrowed money. The current ratio, which measures the ability to pay short-term debts with current assets, is roughly 2.6.
Free cash flow for fiscal 2025 was nearly $5.7 billion, and this figure equals cash flow from operations minus capital expenditures. As a leading name among semiconductor stocks, Applied Materials maintains a global distribution system to support its machinery. QUALCOMM develops foundational wireless and computing technologies, including processors, modems, and software tools.
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