Form 4: Applied Materials Executive Sells Shares for Tax

Applied Materials' President of Semiconductor Products Group, Prabu G. Raja, disposed of 33,406 shares of common stock to cover tax withholding obligations.

Summary

• Prabu G. Raja, President of the Semiconductor Products Group at Applied Materials, Inc. (AMAT), reported a disposition of common stock.
• The transaction occurred on December 19, 2025, and involved 33,406 shares of common stock.
• The shares were disposed of at a price of $256.41 per share.
• This disposition was to cover tax withholding obligations upon the vesting of equity awards, a transaction exempt under Rule 16b-3.
• Following this transaction, Prabu G. Raja directly beneficially owns 169,328 shares of common stock.
• Additionally, 337,974 shares are indirectly beneficially owned through a Living Trust.
• The reported ownership includes 100,517 unvested performance share units (PSUs) and restricted stock units (RSUs) that will convert to common stock upon vesting.
• 39,181 restricted stock units are scheduled to vest in installments from December 2026 through 2028.
• 61,336 performance share units (target amount) are scheduled to vest in installments from December 2026 through 2028, with actual shares ranging from 0% to 200% of the target based on performance goals.

Sentiment

Score: 5

Explanation: Neutral. This is a routine, non-discretionary transaction for tax purposes, which is neither inherently positive nor negative for the company's fundamentals or stock price.

Positives

• The transaction is explicitly stated as exempt under Rule 16b-3, indicating it is a routine tax withholding event rather than a discretionary sale by the executive.
• The executive retains significant direct and indirect beneficial ownership, including 100,517 unvested equity units, aligning their interests with long-term company performance.

Negatives

• Direct beneficial ownership of common stock decreased by 33,406 shares due to the tax withholding.

Risks

• The actual number of shares vesting from performance share units (PSUs) can range from 0% to 200% of the target amount, depending on the achievement of specified performance goals, introducing variability in future equity compensation.

Future Outlook

Future equity compensation includes 39,181 restricted stock units and a target of 61,336 performance share units scheduled to vest in installments from December 2026 through 2028. Vesting is subject to continued employment, and the actual number of shares from PSUs can range from 0% to 200% of the target based on performance achievement.

Management Comments

• "Represents number of shares that were automatically withheld upon vesting of equity awards to cover tax withholding obligations in a transaction exempt under Rule 16b-3."
• "Number of shares includes 100,517 performance share units and restricted stock units previously reported that in the future will be converted on a one-for-one basis into shares of Applied Materials, Inc. common stock upon vesting, which vesting is scheduled to occur as follows: (a) 39,181 restricted stock units are scheduled to vest in installments in December of 2026 through 2028, and (b) 61,336 performance share units are scheduled to vest in installments in December of 2026 through 2028, which number of shares is the target amount, and the actual number of shares that may vest ranges from 0% to 200% of the target amount, depending on achievement of specified performance goals (all vesting is subject to continued employment through each applicable vesting date)."

Industry Context

This Form 4 filing details a routine insider transaction for tax withholding purposes, which is a common occurrence for executives in publicly traded companies across all industries, including the semiconductor sector, who receive equity-based compensation. It does not provide specific insights into broader industry trends or competitive dynamics.

Comparison to Industry Standards

• This transaction represents a standard practice for executives in publicly traded companies to cover tax obligations arising from the vesting of equity awards. Such tax-related dispositions are common across various industries, including technology and semiconductors, and are typically executed under Rule 10b5-1 plans or similar arrangements to ensure compliance and avoid accusations of insider trading.
• The retention of significant unvested equity, including RSUs and PSUs, is also a standard compensation structure designed to align executive incentives with long-term shareholder value, comparable to practices at peer companies like ASML, Lam Research, and KLA Corporation.

Stakeholder Impact

• Shareholders: Minimal direct impact as this is a routine tax-related transaction, not a discretionary sale indicating a change in management's confidence. The executive still holds significant equity, aligning their interests with long-term company performance.

Next Steps

• Vesting of 39,181 restricted stock units in installments from December 2026 through 2028.
• Vesting of 61,336 performance share units (target amount) in installments from December 2026 through 2028, contingent on performance goals and continued employment.

Key Dates

Recommendation

This Form 4 filing details a routine, non-discretionary sale of shares by an executive to cover tax obligations upon the vesting of equity awards. Such transactions are common and do not typically signal a change in the company's fundamental outlook or the executive's confidence. The executive retains substantial direct and indirect ownership, including significant unvested equity. Therefore, this specific filing does not provide new information that would warrant a change in investment recommendation; a "Hold" stance is appropriate, pending further fundamental analysis of the company's performance and market conditions.

Keywords

AMAT, Applied Materials, Form 4, insider transaction, equity awards, tax withholding, Prabu G. Raja, semiconductor, restricted stock units, performance share units