Applied Materials (NASDAQ:AMAT) Shares Down 3.5% - Here's What Happened

Key Points

• Applied Materials shares fell 3.5% to $496.17 amid a broader selloff in chip-equipment stocks, as investors questioned whether elevated AI-related capital-spending expectations can continue.
• The company’s fundamentals remain strong: quarterly revenue rose 24.8% to $9.12 billion and adjusted earnings of $3.50 per share exceeded estimates of $3.40. However, analysts caution that the stock’s premium valuation—about 42.8 times earnings—leaves limited room for disappointing results.
• Analyst sentiment is still broadly positive, with a “Moderate Buy” consensus and an average price target of $643.50, although recent targets and ratings range from equal weight to outperform.

Applied Materials, Inc. (NASDAQ:AMAT - Get Free Report)'s stock price traded down 3.5% on Wednesday . The stock traded as low as $488.55 and last traded at $496.17. 6,540,629 shares traded hands during trading, a decline of 21% from the average daily volume of 8,263,020 shares. The stock had previously closed at $514.33.

Key Stories Impacting Applied Materials

Here are the key news stories impacting Applied Materials this week:

• Positive Sentiment: An analyst upgrade reportedly supported a bullish view of Applied Materials’ semiconductor-equipment outlook, while Zacks also included AMAT on its No. 1 (Strong Buy) momentum list. Applied Materials Trading Higher Following Analyst Upgrade ASX vs. AMAT: Which AI Semiconductor Stock is the Better Buy?
• Positive Sentiment: Recent commentary remains constructive on AMAT’s long-term growth, citing AI-driven semiconductor demand, memory investment and the company’s broad equipment portfolio. Recent earnings also showed revenue growth and an EPS beat, supporting the fundamental case.
• Neutral Sentiment: A comparison with ASE Technology argues that ASE offers faster growth, improving margins and a lower valuation, highlighting competitive and valuation considerations for investors choosing among AI semiconductor stocks. ASX vs. AMAT: Which AI Semiconductor Stock is the Better Buy?
• Negative Sentiment: Applied Materials is falling alongside Lam Research and Teradyne in a second session of heavy selling. The sector-wide decline indicates concern that elevated AI-related capital spending expectations may be too aggressive or may slow, creating downside risk for richly valued chip-equipment shares after their substantial 2026 rally. What’s Prompting the Selloff in Chip Equipment Stocks?
• Negative Sentiment: Some analysts caution that AMAT is “priced for perfection.” Its premium valuation leaves less room for execution missteps or weaker-than-expected AI and semiconductor-equipment demand, even though the longer-term outlook remains favorable.

Analysts Set New Price Targets

Several brokerages recently issued reports on AMAT. Zacks Research upgraded Applied Materials from a "hold" rating to a "strong-buy" rating in a report on Wednesday, July 1st. Morgan Stanley decreased their target price on Applied Materials from $646.00 to $642.00 and set an "equal weight" rating for the company in a research report on Friday, August 14th. William Blair assumed coverage on Applied Materials in a research note on Tuesday, August 11th. They issued a "market perform" rating for the company. Cantor Fitzgerald reiterated an "overweight" rating on shares of Applied Materials in a report on Friday, August 14th. Finally, Mizuho lifted their target price on Applied Materials from $540.00 to $650.00 and gave the stock an "outperform" rating in a research report on Wednesday, July 8th. One research analyst has rated the stock with a Strong Buy rating, twenty-seven have assigned a Buy rating and six have issued a Hold rating to the company's stock. According to data from MarketBeat, the stock has a consensus rating of "Moderate Buy" and a consensus price target of $643.50.

Applied Materials Stock Performance

The company has a 50-day moving average of $565.31 and a 200-day moving average of $448.45. The firm has a market capitalization of $393.94 billion, a price-to-earnings ratio of 42.77, a price-to-earnings-growth ratio of 1.25 and a beta of 1.61. The company has a current ratio of 2.42, a quick ratio of 1.79 and a debt-to-equity ratio of 0.20.

Applied Materials (NASDAQ:AMAT - Get Free Report) last issued its earnings results on Thursday, August 13th. The manufacturing equipment provider reported $3.50 earnings per share for the quarter, topping analysts' consensus estimates of $3.40 by $0.10. Applied Materials had a net margin of 30.05% and a return on equity of 38.02%. The company had revenue of $9.12 billion for the quarter, compared to analysts' expectations of $8.99 billion. During the same period in the prior year, the company earned $2.48 earnings per share. The firm's revenue was up 24.8% compared to the same quarter last year. Applied Materials has set its Q4 2026 guidance at 3.820-4.220 EPS. On average, equities research analysts forecast that Applied Materials, Inc. will post 12.65 earnings per share for the current fiscal year.

Applied Materials Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Stockholders of record on Thursday, August 20th will be paid a $0.53 dividend. The ex-dividend date of this dividend is Thursday, August 20th. This represents a $2.12 annualized dividend and a dividend yield of 0.4%. Applied Materials's dividend payout ratio is presently 18.28%.

Insider Activity

In other Applied Materials news, CEO Gary E. Dickerson sold 20,000 shares of the company's stock in a transaction that occurred on Tuesday, June 30th. The stock was sold at an average price of $735.22, for a total value of $14,704,400.00. Following the completion of the sale, the chief executive officer directly owned 1,599,843 shares in the company, valued at $1,176,236,570.46. This represents a 1.23% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. Also, SVP Omkaram Nalamasu sold 24,263 shares of the company's stock in a transaction on Tuesday, June 16th. The shares were sold at an average price of $593.43, for a total value of $14,398,392.09. Following the completion of the sale, the senior vice president owned 146,916 shares of the company's stock, valued at approximately $87,184,361.88. This trade represents a 14.17% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold 278,088 shares of company stock valued at $169,654,805 over the last 90 days. Corporate insiders own 0.30% of the company's stock.

Institutional Trading of Applied Materials

A number of hedge funds have recently bought and sold shares of the company. Capital Research Global Investors grew its holdings in shares of Applied Materials by 119.8% during the 4th quarter. Capital Research Global Investors now owns 32,707,049 shares of the manufacturing equipment provider's stock valued at $8,405,458,000 after acquiring an additional 17,829,377 shares in the last quarter. Norges Bank bought a new stake in shares of Applied Materials during the 4th quarter worth $2,858,543,000. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC increased its stake in shares of Applied Materials by 617.2% in the third quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 9,129,483 shares of the manufacturing equipment provider's stock worth $1,869,170,000 after purchasing an additional 7,856,576 shares during the period. Bank of America Corp DE acquired a new position in shares of Applied Materials during the second quarter worth approximately $5,252,863,000. Finally, Auto Owners Insurance Co boosted its holdings in Applied Materials by 25,824.4% in the 4th quarter. Auto Owners Insurance Co now owns 3,370,167 shares of the manufacturing equipment provider's stock valued at $86,610,000 after purchasing an additional 3,357,167 shares during the period. 80.56% of the stock is owned by hedge funds and other institutional investors.

Applied Materials Company Profile

Applied Materials, Inc is a U.S.-based supplier of equipment, services and software used to manufacture semiconductor chips, flat panel displays and other advanced materials. Headquartered in Santa Clara, California, the company designs and sells capital equipment and related technologies that enable production of integrated circuits, display panels and materials used across the electronics supply chain.

Applied Materials' offerings include process equipment and factory software that support critical steps in device fabrication, such as deposition, etch, implantation, inspection and metrology, as well as systems for packaging and advanced heterogeneous integration.

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