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

One company builds the tools, while the other builds the chips and the factories. Choosing between Applied Materials (NASDAQ:AMAT) and Intel (NASDAQ:INTC) means deciding where you see the most value.

Applied Materials provides the essential equipment used to manufacture semiconductors, making it a critical supplier to the entire industry. Intel is a traditional chipmaker shifting its focus toward becoming a global foundry. Comparing these two reveals different ways to play the growth of the technology sector.

The case for Applied Materials

In its latest annual report, Applied Materials describes itself as a leader in materials engineering solutions used to create nearly all new chips and advanced displays globally. Its business model relies on the ongoing expansion of global chip manufacturing capacity among semiconductor stocks. Customer concentration like this adds a layer of risk to the business, as two customers accounted for approximately 19% and 15% of net revenue in fiscal 2025.

In FY 2025, revenue reached nearly $28.4 billion, up roughly 4.4% compared to the prior year. The company reported net income of approximately $7 billion. While revenue grew, the net margin slightly decreased to about 24.7% from 26.4% in the previous fiscal year, reflecting slight shifts in the business mix.

As of its October 2025 balance sheet, the debt-to-equity ratio was nearly 0.3, which compares total debt to shareholder equity. The current ratio, which measures the ability to pay short-term obligations using liquid assets, was roughly 2.6. Free cash flow, calculated as cash from operations minus capital expenditures, was approximately $5.7 billion. This cash generation allows the company to invest in research while maintaining a strong financial position.

The case for Intel

Intel designs and manufactures its own chips while aggressively expanding its foundry services to build chips for other companies. In its latest annual report, the company detailed a major strategic shift to construct massive fabrication plants. This transition is capital-intensive and currently relies on a limited number of confirmed partners, with Tesla (NASDAQ:TSLA) being the only publicly confirmed 14A customer for these foundry services.

In fiscal 2025, revenue reached roughly $52.9 billion, essentially flat compared to the prior year. The company reported a net loss of approximately $267 million for the period. While still in the red, this result showed a significant improvement over the heavy net loss Intel posted in fiscal 2024, though net margin remained slightly negative at nearly -0.5%.

As of its December 2025 balance sheet, the debt-to-equity ratio was roughly 0.4. The current ratio was approximately 2, indicating the company holds twice as many current assets as current liabilities. Free cash flow was negative at nearly $4.9 billion, calculated as cash flow from operations minus capital expenditures. Note that stock-based compensation represented roughly 25.1% of operating cash flow, which inflates reported cash generation since SBC is a non-cash expense added back in the cash flow statement.

Risk profile comparison

Applied Materials faces significant regulatory risks, particularly regarding U.S. export controls on technology sales to China. These restrictions led to a $252 million settlement in February 2026 for export violations involving Semiconductor Manufacturing International. The company also operates in a cyclical industry where demand for manufacturing equipment can fluctuate based on global economic health.

Intel carries significant financial risks following a $15 billion equity raise, which can dilute the value of shares held by existing investors. The company is also dealing with shareholder litigation regarding a 10% equity stake deal granted to the U.S. government. Operationally, it must manage heavy capital expenditure requirements while competing against Advanced Micro Devices (NASDAQ:AMD).

Valuation comparison

Intel appears cheaper based on sales, but Applied Materials carries a lower multiple relative to its future earnings estimates.

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

Which stock would I buy in 2026?

Intel is in the middle of a significant business transformation, moving from solely designing its own chips to expanding its foundries to make chips for other companies. This push into contract manufacturing is expensive (those fabs aren't going to build themselves). You can see some evidence of that in the company's balance sheet: While Intel only lost around $267 million in fiscal 2025, it had a net loss of $18.8 billion the prior year. That might make some conservative investors nervous.

Meanwhile, Applied Materials is not currently pursuing any such capital-intensive strategy, and it hasn't reported a loss in at least 10 years. It pays a (very) modest dividend, while Intel suspended its dividend in 2024. And though investors know past performance is no indication of future results, Applied Materials stock has outperformed Intel shares by more than 1,200 percentage points over the past 10 years. Intel's returns haven't even kept pace with the S&P 500 over that time frame.

It would be silly to suggest a half-trillion-dollar company is going to go belly-up overnight, and I don't think that's what will happen to Intel. But the business is in a key transitional moment, and that always brings uncertainty. For that reason, I think Applied Materials is the more attractive buy here.

Erin Kennedy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Applied Materials, Intel, and Tesla. The Motley Fool has a disclosure policy.