Applied Materials (NASDAQ:AMAT) Shares Gap Down - Time to Sell?

Key Points

• Applied Materials shares fell 5.5%, opening at $499.40 after previously closing at $534.54, as investors questioned whether its earnings beat and outlook were strong enough following a major year-to-date rally.
• Fundamentals remained strong: fiscal Q3 revenue rose 24.8% to $9.12 billion and adjusted EPS reached $3.50, while Q4 revenue and EPS guidance exceeded consensus estimates. AI infrastructure, advanced packaging and memory demand are supporting growth.
• Analyst sentiment is still broadly positive, with a consensus “Moderate Buy” rating and $611.61 price target, though valuation, competitive pressure and the need to convert AI spending into sustained orders remain key risks.

Applied Materials, Inc. (NASDAQ:AMAT - Get Free Report) gapped down before the market opened on Friday . The stock had previously closed at $534.54, but opened at $499.40. Applied Materials shares last traded at $511.8660, with a volume of 3,557,441 shares trading hands.

Trending Headlines about Applied Materials

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

• Positive Sentiment: AI demand is driving strong fundamentals. Fiscal Q3 revenue rose 24.8% year over year to $9.12 billion, exceeding the $8.99 billion consensus estimate, while adjusted EPS of $3.50 topped expectations near $3.40. Advanced packaging, memory and AI infrastructure were key growth drivers. Applied Materials Q3 Earnings Beat Estimates, Revenues Rise Y/Y
• Positive Sentiment: Management raised near-term expectations and sees extended visibility. Q4 revenue guidance of $9.8 billion-$10.8 billion and EPS guidance of $3.82-$4.22 are above consensus estimates of approximately $9.5 billion and $3.65, respectively. Management also cited stronger systems growth and customer demand extending into fiscal 2027 and beyond. Applied Materials Forecasts Quarterly Revenue Above Estimates
• Positive Sentiment: Analyst sentiment remains supportive. JPMorgan raised its price target to $660 with an overweight rating, while RBC increased its target to $600 and assigned an outperform rating. Needham maintained a buy rating with a $740 target. Stock Market Today
• Neutral Sentiment: Investor focus is shifting to execution. Future results will be judged on systems growth, gross margins and evidence that AI-related capital spending is translating into sustained orders. Applied Materials reported a 50.4% non-GAAP Q3 gross margin, and management will participate in upcoming investor conferences. Applied Materials to Participate in Upcoming Investor Conferences
• Negative Sentiment: The earnings beat was not large enough for the market. After AMAT’s substantial year-to-date advance, investors were looking for an even faster growth trajectory. Reports also cited competitive pressure and concerns that guidance, while above estimates, did not clear the elevated “perfect execution” bar. Applied Materials Slips as Investors Seek Faster Growth After Stellar Run

Wall Street Analyst Weigh In

Several equities research analysts have recently issued reports on the company. Erste Group Bank lowered Applied Materials from a "buy" rating to a "hold" rating in a research note on Wednesday, August 5th. Wolfe Research boosted their price target on Applied Materials from $500.00 to $550.00 and gave the company an "outperform" rating in a report on Friday, May 15th. Truist Financial set a $575.00 target price on shares of Applied Materials in a research report on Thursday, May 28th. Jefferies Financial Group boosted their price target on Applied Materials from $510.00 to $770.00 and gave the stock a "buy" rating in a research report on Friday, June 26th. Finally, Deutsche Bank Aktiengesellschaft reiterated a "buy" rating and set a $605.00 price objective on shares of Applied Materials in a report on Friday. One investment analyst has rated the stock with a Strong Buy rating, twenty-seven have issued a Buy rating and seven have given a Hold rating to the company. Based on data from MarketBeat.com, the company presently has a consensus rating of "Moderate Buy" and a consensus price target of $611.61.

Applied Materials Stock Down 5.5%

The company has a market capitalization of $400.94 billion, a PE ratio of 47.40, a price-to-earnings-growth ratio of 1.38 and a beta of 1.61. The business's 50-day simple moving average is $563.06 and its 200-day simple moving average is $444.45. The company has a current ratio of 2.51, a quick ratio of 1.80 and a debt-to-equity ratio of 0.22.

Applied Materials (NASDAQ:AMAT - Get Free Report) last released its quarterly earnings data on Thursday, August 13th. The manufacturing equipment provider reported $3.50 earnings per share for the quarter, beating analysts' consensus estimates of $3.40 by $0.10. The business had revenue of $9.12 billion during the quarter, compared to analyst estimates of $8.99 billion. Applied Materials had a return on equity of 36.97% and a net margin of 29.31%.The company's revenue was up 24.8% on a year-over-year basis. During the same quarter last year, the business posted $2.48 EPS. Applied Materials has set its Q4 2026 guidance at 3.820-4.220 EPS. As a group, equities research analysts anticipate that Applied Materials, Inc. will post 12.22 EPS for the current fiscal year.

Applied Materials Announces Dividend

The company also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Investors of record on Thursday, August 20th will be given a dividend of $0.53 per share. This represents a $2.12 annualized dividend and a yield of 0.4%. The ex-dividend date is Thursday, August 20th. Applied Materials's dividend payout ratio (DPR) is currently 19.91%.

Insiders Place Their Bets

In other news, SVP Omkaram Nalamasu sold 24,263 shares of the stock in a transaction dated Tuesday, June 16th. The shares were sold at an average price of $593.43, for a total transaction of $14,398,392.09. Following the sale, the senior vice president directly owned 146,916 shares of the company's stock, valued at $87,184,361.88. This represents a 14.17% decrease in their position. The transaction was disclosed in a legal filing with the SEC, which is available through this link. Also, SVP Timothy M. Deane sold 8,621 shares of the firm's stock in a transaction dated Monday, June 15th. The shares were sold at an average price of $590.76, for a total value of $5,092,941.96. Following the sale, the senior vice president owned 134,631 shares in the company, valued at $79,534,609.56. This trade represents a 6.02% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. In the last 90 days, insiders have sold 278,088 shares of company stock valued at $169,654,805. Insiders own 0.30% of the company's stock.

Institutional Inflows and Outflows

Several large investors have recently made changes to their positions in AMAT. Cornerstone Financial Management LLC acquired a new position in Applied Materials during the fourth quarter worth $25,000. Wilkerson Advisory Group LLC acquired a new stake in shares of Applied Materials in the fourth quarter valued at about $26,000. Harborfront Financial Group LLC purchased a new stake in shares of Applied Materials during the second quarter worth about $27,000. Financial Freedom LLC acquired a new position in shares of Applied Materials during the 1st quarter worth about $28,000. Finally, Joseph Group Capital Management purchased a new position in Applied Materials in the 4th quarter valued at about $31,000. 80.56% of the stock is owned by institutional investors and hedge funds.

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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