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Applied MaterialsKEYBANC INDUSTRIAL, AUTOMOTIVE

& TRANSPORTATION CONFERENCE

May 31, 2017

| External Use

Safe Harbor

This presentation contains forward-looking statements, including those regarding anticipated growth and trends in our

businesses and markets, industry outlooks, technology inflections, our strategies, our development of new products and

technologies, the anticipated demand for our products, our business and financial performance and outlook, our financial plan

and capital allocation, and other statements that are not historical facts. These statements and their underlying assumptions

are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to

differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our

products; global economic and industry conditions; consumer demand for electronic products; customers’ technology and

capacity requirements; the introduction of new and innovative technologies, and the timing of technology inflections; our

ability to develop, deliver and support new products, expand our markets and increase market share; the concentrated nature

of our customer base; market acceptance of existing and newly developed products; our ability to obtain and protect

intellectual property rights in key technologies; our ability to achieve the objectives of operational and strategic initiatives, and

attract, motivate and retain key employees; the variability of operating expenses and results among products and segments,

and our ability to accurately forecast future results, market conditions, customer requirements and business needs; and other

risks and uncertainties described in our most recent Form 10-Q and other SEC filings. All forward-looking statements are

based on management’s estimates, projections and assumptions as of May 31, 2017, and we assume no obligation to update

them. All information and data that speaks as of a future date are based on management’s estimates, projections and

assumptions, unless otherwise noted.

This presentation also includes non-GAAP adjusted financial measures, along with reconciliations to GAAP measures.

Applied Materials, the Applied Materials logo, and other trademarks so designated as product names are trademarks of

Applied Materials, Inc. Other names and brands are the property of third parties.

2

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Bob Halliday, CFO of Applied Materials

INTRODUCTION

Applied Materials | CFO

Varian Semiconductor Equipment | CFO

Ionics Inc. | COO & CFO

Alliant Computer Systems | Corporate Controller

Symbolics Inc. | Corporate Controller

Millipore Corp | Finance Manager

Arthur Anderson & Company | CPA

2011 – Present

2001 – 2011

1990 – 2000

1987 – 1990

1984 – 1987

1980 – 1984

1977 – 1980

Semi Equipment

IndustrialsWater purification equipment

ComputingArtificial Intelligence

IndustrialsMedical equipment

Zoll Medical Devices | Board Member2003 – 2013

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AMATlisted on NASDAQ

since 1972

~$14 billion FY17E Revenue

Founded in 1967

Headquartered in

Silicon Valley

~16,600 employees

82 locations

In 17 countries

semiconductor and display equipment companyWorld’s #1

>10,200patents

$1.5 billionFY16 R&D

Leader in technology used to make virtually every new chip and advanced display in the world

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Applied Materials

Listed as One of

the World’s Most

Admired Companies

FEBRUARY 2017

Applied Materials’ 2016 gain,

as new-equipment orders

rose by 23% in the fiscal year

DECEMBER 2016

Applied Materials Ranks #18

on Barron’s 500

MAY 2017

Gary Dickerson Named one

of the World's Best CEOs

MARCH 2017

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FY2016 FCF Margin (2)*

6

Attractive Business

* Data sources for other than AMAT: Thomson First Call as of 5/24/2017. Average of NYSE & Nasdaq-listed companies with >$10B market capitalization based on industry/company list published by the NYU Stern School of Business.

(Number of companies in each category: Machinery – 6; Chemical – 11, Aero Defense – 12, Transportation – 7)

(1) Rev CAGR: 3 year Compound Annual Growth Rate calculated between FY13 Actual Revenue and FY16 Actual Revenue

(2) FCF (Free Cash Flow) Margin formula: (Operating Cash Flow – Capital Expenditure) / Revenue. See slides at the end of the presentation for reconciliation of Applied Materials GAAP to adjusted Non-GAAP measures

(3) ROIC (Return on Invested Capital) formula: Operating income x (1- Effective Tax Rate) / (Average of Long-term Debt + Average of Shareholders Equity), Non-GAAP Operating income & Non-GAAP Effective tax rate used for Applied Materials.

See slides at the end of the presentation for reconciliation of Applied GAAP to adjusted Non-GAAP measures

(4) Forward PE based on stock price and NTM EPS as reported by Thomson First Call as of 5/24/2017

20%

9%

6%

2%3%

AMAT Machinery Chemical Aero Defense Transportation

Rev CAGR (FY13-FY16) (1)*

13%

-6%

-21%

4%

-1%AMAT Aero Defense

Machinery Chemical Transportation

Forward PE (4)*FY2016 ROIC (3)*

20 20 20 19


19%

14% 15% 16%18%


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Applied Materials

Attractive

Markets

1

Investing in

Innovation

2

Increasing

Profitability

and Cash

Returns

3

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Applied is at the Foundation of Technology

SEMI EQUIPMENT

SEMI DESIGN &

MANUFACTURING HARDWARE DATA SERVICES

#1

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www

9

More Semiconductor Demand Drivers

= Growth + Lower Volatility

PC + Internet

Mobile +

Social Media

Emerging

ApplicationsIoT / Smart devices

Big Data

AI / Machine learning

Industry 4.0

* 2000 – 2009 ** 2010 – 2016

2000 2010 2016

Av. WFE = $25.5B*

σ = $8.0B

Av. WFE = $32.4B**

σ = $3.0B

Av. WFE =

σ =

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Industry 4.0 = IoT, Big Data, AI

10

Increasing

silicon content

required to

Generate,

Transmit,

Understand,

Store and

Display Data

* Source: BCM Advanced Research - Associate member of Intel® Internet of Things Solutions Alliance

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Applied is at the Foundation of Industry 4.0

11

Generate Transmit Understand

PROCESSING

DisplayStore

STORAGE & DISPLAY

Data

Key

Applied

Products

High-Growth

Semi

Leadership

Semi & ServicesDisplay

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Applied Materials FY 2016 Revenue Composition

~40% of business

characterized by

high growth

~60% of business

characterized by

steady growth

$ Billions

’13 – ’16

Rev CAGR

Leadership Semi (1) 5%

Services 9%

Steady Growth 7%

High-Growth Semi (2) 25%

Display & Other 21%

High Growth 24%

Total Applied 13%

(1) Leadership Semi Products: Epitaxy, PVD, Implant, CMP, Thermal, ECD

(2) High-Growth Semi Products: CVD, Etch, Process Control, ALD

Leadership

Semi

ServicesDisplay

& Other

High-growth

Semi

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$7.8 $7.6 $8.5

$14.3

$17.6

2013 2014 2015 2016 2017 E

13

Display Proliferation Drives Growth

Mobile

TVAR Glasses

VS Goggles

TVResolution4K

Size +1.5’’/yr

SmartphonesLCD OLED

Flex OLED

Display Equipment Market ($B)

* Source: Internal sizing

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Applied After-Market Services Business

Growing semi installed base

drives sustainable service business

2013 2014 2015 2016

~30,000

Tools

2017E

2,500

5,000

>6,000

2013 2016 2017E

Tools Under Service Agreement

Service agreements

generate “sticky” returns

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Applied Materials

Attractive

Markets

1

Investing in

Innovation

2

Increasing

Profitability

and Cash

Returns

3

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$1.2B $1.3B $1.4B $1.5B $1.5B

56%

62%

64% 65%66%

FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 E

16

Investment in Innovation Fuels Growth

R&D*

R&D %

of Opex*

Allocated More Spending to R&DR&D % of Opex 56% (FY12) 66% (FY16)

Focused R&D on Most Attractive MarketsSemi + Display + New = 89% of FY16 R&D

Invested in Disruptive Products3X leverage in New Disruptive Products

Increased New Product Success Rateby 66%

* R&D and Opex is Non-GAAP adjusted. For reconciliations of GAAP to adjusted Non-GAAP, see slides at the end of the presentation.

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Applied Materials

Attractive

Markets

1

Investing in

Innovation

2

Increasing

Profitability

and Cash

Returns

3

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Driving Profitable Growth

(1) For reconciliations of GAAP to adjusted Non-GAAP, see slides at the end of the presentation.

(2) ROIC(Return on Invested Capital) Formula: Non-GAAP Operating income x (1- Non-GAAP Effective tax rate) / (Average of Long-term Debt + Average of Shareholders equity)

EPS (Non-GAAP)(1)Revenue

Operating Margin (Non-GAAP)(1) ROIC (Non-GAAP)(1) (2)

4.86.0 6.1 6.9

2.0

2.1 2.42.6

0.7

0.80.9

1.2

$7.5B

$9.1B $9.7B$10.8B

FY'13 FY'14 FY'15 FY'16 FY17E

SEMI

AGS

DISPLAY

1.9X Growth

0.59

1.07 1.19

1.75

FY'13 FY'14 FY'15 FY'16 FY'17E

+197% Growth

14%

20% 20%22%

FY'13 FY'14 FY'15 FY'16 FY'17E

+8% Points

9%

15% 15%

19%

FY'13 FY'14 FY'15 FY'16

+10% Points

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Commitment to Shareholder Returns

$4.4B

1.7M1.7M

1.6M

1.4M1.4M 1.4M 1.3M 1.3M

1.3M1.2M 1.2M 1.2M

1.1M

$0B

$5B

$10B

$15B

$20B

$25B

FY00-FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

SHAREHOLDER

RETURNS AS

% of FCF

Diluted Weighted

Average Shares

Cumulative

Share

Repurchases

Cumulative

Dividends

$16.0B

105 % in last

5 years 89% in last

10 years 96% in last

17 years

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Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013

Reported operating income - GAAP basis 2,152$ 1,693$ 1,520$ 432$

188 185 183 201

Acquisition integration and deal costs 2 2 34 38

- (89) (30) 7

- 50 73 17

Impairment of goodwill and intangible assets - - - 278

(3) 49 5 63

Gain on sale of facility - - - (4)

Other significant gains, losses or charges, net8, 9

8 6 (4) -

2,347$ 1,896$ 1,781$ 1,032$

21.7% 19.6% 19.6% 13.7%

1

2

3

4

5

6

7

8

9 Results for fiscal 2015 included immaterial correction of errors related to prior periods, partially offset by costs related to executive termination.

Results for fiscal 2013 included $39 million of employee-related costs, net, related to the restructuring program announced on October 3, 2012, and restructuring

and asset impairment charges of $26 million related to the restructuring program announced on May 10, 2012, partially offset by a favorable adjustment of $2 million

related to other restructuring plans.

Results for fiscal 2012 included employee-related costs of $106 million related to the restructuring program announced on October 3, 2012, restructuring and asset

impairment charges of $48 million related to the restructuring program announced on May 10, 2012, and severance charges of $14 million related to the integration

Results for fiscal 2015 primarily included $35 million of inventory charges, $17 million of restructuring charges and asset impairments related to cost reductions in the

solar business, and a $2 million favorable adjustment of restructuring reserves related to prior restructuring plans.

Results for fiscal 2014 included $5 million of employee-related costs related to the restructuring program announced on October 3, 2012.

These items are incremental charges related to the terminated business combination agreement with Tokyo Electron Limited, consisting of acquisition-related and

integration planning costs.

Results for the fiscal 2016 primarily included benefit from sales of solar equipment tools for which inventory had been previously reserved related to the cost

reductions in the solar business.

Results for fiscal 2016 included a loss of $8 million due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified

time period.

These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

Non-GAAP adjusted operating income

Non-GAAP adjusted operating margin

Restructuring, inventory charges (reversals) and asset impairments3, 4, 5, 6, 7

Non-GAAP Adjusted Operating Income

Certain items associated with acquisitions1

Loss (gain) on derivatives associated with terminated business combination, net

Certain items associated with terminated business combination2

(In millions, except percentages)

Twelve Months Ended

APPLIED MATERIALS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

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(In millions, except per share amounts)

Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013

Non-GAAP Adjusted Earnings Per Diluted Share

Reported earnings per diluted share - GAAP basis1

1.54$ 1.12$ 0.87$ 0.21$

Certain items associated with acquisitions 0.16 0.14 0.13 0.14

Acquisition integration and costs - - 0.02 0.02

Gain on derivatives associated with terminated business combination,

net - (0.05) (0.02) -

Certain items associated with terminated business combination - 0.03 0.05 0.01

Impairment of goodwill and intangible assets - - - 0.21

Restructuring, inventory charges and asset impairments - 0.03 - 0.03

Other significant gains, losses or charges, net 0.01 0.01 - -

Impairment of strategic investments, net - - - -

Reinstatement of federal R&D tax credit, resolution of prior years'

income tax filings and other tax items1

0.04 (0.09) 0.02 (0.03)

Non-GAAP adjusted earnings per diluted share 1.75$ 1.19$ 1.07$ 0.59$

Weighted average number of diluted shares 1,116 1,226 1,231 1,219

1


UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

Amounts for fiscal 2015 included an adjustment to decrease the provision for income taxes by $28 million with a corresponding increase in net

income, resulting in an increase in diluted earnings per share of $0.02. The adjustment was excluded in Applied's non-GAAP adjusted results

and was made primarily to correct an error in the recognition of cost of sales in the U.S. related to intercompany sales, which resulted in

overstating profitability in the U.S. and the provision for income taxes in immaterial amounts in each year since fiscal 2010.

Twelve Months Ended

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Twelve Months

Ended

(In millions, except percentages) Oct 30, 2016

Free Cash Flow

2,466

Capital expenditures (253)

Free Cash Flow 2,213$

Operating Cash Flow as a Percentage of Revenue 22.8%

Free Cash Flow as a Percentage of Revenue 20.4%

Cash provided by operating activities


UNAUDITED RECONCILIATION OF FREE CASH FLOW

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(In millions, except percentages) Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013

Provision for income taxes (GAAP basis) (a) 292$ 221$ 376$ 94$

(45) 110 (28) 37

Income tax effect of non-GAAP adjustments 19 17 38 102

Non-GAAP adjusted provision for income taxes (b) 266$ 348$ 386$ 233$

2,013$ 1,598$ 1,448$ 350$

Certain items associated with acquisitions 188 185 183 201

Acquisition integration and deal costs 2 2 34 38

Loss (gain) on derivative associated with announced business combination, net - (89) (30) 7

Certain items associated with announced business combination - 50 73 17

Impairment of goodwill and intangible assets - - - 278

Restructuring, inventory charges (reversals) and asset impairments (3) 49 5 63

Impairment (gain on sale) of strategic investments, net 3 4 (9) 1

Loss on early extinguishment of debt 5 - - -

Other significant gains, losses or charges, net 8 6 (4) (4)

Non-GAAP adjusted income before income taxes (d) 2,216$ 1,805$ 1,700$ 951$

Effective income tax rate (GAAP basis) (a/c) 14.5% 13.8% 26.0% 26.9%

Non-GAAP adjusted effective income tax rate (b/d) 12.0% 19.3% 22.7% 24.5%

Reinstatement of federal R&D tax credit, resolutions of prior years’ income tax filings and

other tax items

Twelve Months Ended

Income before income taxes (GAAP basis) (c)


UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED EFFECTIVE INCOME TAX RATE

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(In millions) Oct 30, 2016 Oct 25, 2015 Oct 26, 2014 Oct 27, 2013 Oct 28, 2012

RD&E expenses (GAAP basis) 1,540$ 1,451$ 1,428$ 1,320$ 1,237$


- - (1) (3) (4)

Acquisition integration costs - (1) (3) (6) (3)


- - (1) - -

Other significant gains, losses or charges, net5

- 2 - - -

Non-GAAP adjusted RD&E expenses 1,540$ 1,452$ 1,423$ 1,311$ 1,230$

Operating expenses (GAAP basis) 2,359$ 2,259$ 2,323$ 2,559$ 2,902$


(21) (23) (25) (35) (45)

Acquisition integration and deal costs (2) (2) (33) (35) (81)

Impairment of goodwill and intangible assets - - - (278) (421)

Restructuring charges (reversals) and asset impairments3

1 (14) (5) (63) (168)

Gain (loss) on derivatives associated with terminated business combination, net - 89 30 (7) -


- (50) (73) (17) -

Other significant gains, losses or charges, net4, 5

(8) (8) 4 4 -

Non-GAAP adjusted operating expenses 2,329$ 2,251$ 2,221$ 2,128$ 2,187$

RD&E expense as a percentage of operating expenses 65.3% 64.2% 61.5% 51.6% 42.6%

Non-GAAP adjusted RD&E expenses as a percentage of operating expenses 66.1% 64.5% 64.1% 61.6% 56.2%

4 Results for fiscal 2016 included a loss of $8 million due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period.

5 Results for fiscal 2015 included immaterial correction of errors related to prior periods, partially offset by costs related to executive termination.


UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RD&E AND OPERATING EXPENSES

Twelve Months Ended

1 These items are incremental charges attributable to completed acquisitions, consisting of amortization of purchased intangible assets.

2 These items are incremental charges related to the terminated business combination agreement with Tokyo Electron Limited, consisting of acquisition-related and integration planning costs.

3 Results for fiscal 2012 included employee-related costs of $106 million related to the restructuring program announced on October 3, 2012, restructuring and asset impairment charges of

$48 million related to the estructuring program announced on May 10, 2012, and severance charges of $14 million related to the integration of Varian.

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