Applied Materials (NASDAQ:AMAT) Shares Up 5.5% - Still a Buy?

Key Points

• Applied Materials shares jumped 5.5% to $546.62, driven by renewed enthusiasm for AI and semiconductor stocks. The company also reported strong fundamentals, with its latest quarter beating earnings and revenue estimates and revenue rising 11.4% year over year.
• Wall Street remains broadly bullish, with a consensus “Moderate Buy” rating and an average price target of $603.23. Analysts cited potential for another earnings beat and continued demand for AI-related chips and advanced packaging.
• Risks include elevated valuation and sector uncertainty: AMAT trades at roughly 51 times earnings, while growing Chinese competition and the possibility that strong results are already priced in could increase volatility around upcoming earnings.

Shares of Applied Materials, Inc. (NASDAQ:AMAT - Get Free Report) rose 5.5% on Tuesday . The stock traded as high as $549.67 and last traded at $546.62. Approximately 7,862,167 shares traded hands during mid-day trading, a decline of 5% from the average session volume of 8,292,550 shares. The stock had previously closed at $518.21.

Key Headlines Impacting Applied Materials

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

• Positive Sentiment: AI-driven semiconductor rally: Semiconductor ETFs surged as investors returned to the AI trade, improving sentiment toward equipment makers such as Applied Materials. The sector-wide move is likely a primary reason AMAT shares have been trading higher. Semiconductor ETFs Surge up to 19% in Huge Rally as the AI Trade Ramps Back Up
• Positive Sentiment: Potential earnings beat: Analysts highlight AMAT’s strong history of exceeding quarterly estimates and say its current earnings indicators point to another potential beat. That is supporting optimism ahead of the company’s next report. Will Applied Materials (AMAT) Beat Estimates Again in Its Next Earnings Report?
• Positive Sentiment: Solid operating momentum: Applied Materials’ latest reported quarter exceeded consensus on both earnings and revenue, with revenue increasing year over year. Its profitability and forecast for the current quarter provide fundamental support for the stock, particularly as AI-related chip and advanced-packaging demand remains strong.
• Neutral Sentiment: Recent outperformance: AMAT gained in the prior trading session and outperformed the broader market, indicating improving short-term momentum. The move also raises the importance of upcoming results because the stock’s valuation already reflects considerable growth expectations. Applied Materials (AMAT) Outperforms Broader Market: What You Need to Know
• Negative Sentiment: China competition risk: Semiconductor stocks recently weakened on fears that increasing Chinese competition could pressure pricing, market share and demand for some U.S. equipment suppliers. This remains a sector-level risk for AMAT. Semiconductor Stocks Sink Over Fears of Increased Competition From China
• Negative Sentiment: Valuation and earnings risk: One analyst maintained a favorable view of AMAT’s fundamentals but downgraded the stock ahead of earnings, suggesting that strong results may already be reflected in the share price and that any guidance shortfall could trigger volatility. Applied Materials: Strong Fundamentals, But I'm Downgrading Ahead of Earnings

Wall Street Analyst Weigh In

AMAT has been the subject of several recent research reports. Deutsche Bank Aktiengesellschaft raised their price objective on Applied Materials from $450.00 to $550.00 and gave the company a "buy" rating in a research report on Friday, May 15th. UBS Group lifted their price target on shares of Applied Materials from $570.00 to $705.00 and gave the company a "buy" rating in a research report on Wednesday, July 15th. Cantor Fitzgerald upped their price objective on shares of Applied Materials from $650.00 to $850.00 and gave the stock an "overweight" rating in a report on Monday, June 29th. B. Riley Financial raised their target price on shares of Applied Materials from $550.00 to $790.00 and gave the company a "buy" rating in a research note on Friday, June 26th. Finally, Mizuho boosted their price target 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 equities research analyst has rated the stock with a Strong Buy rating, twenty-seven have given a Buy rating and six have given a Hold rating to the stock. Based on data from MarketBeat, Applied Materials has a consensus rating of "Moderate Buy" and a consensus price target of $603.23.

Applied Materials Price Performance

The company has a quick ratio of 1.80, a current ratio of 2.51 and a debt-to-equity ratio of 0.22. The firm has a market capitalization of $433.99 billion, a PE ratio of 51.33, a PEG ratio of 1.29 and a beta of 1.61. The firm's fifty day simple moving average is $552.58 and its 200-day simple moving average is $432.35.

Applied Materials (NASDAQ:AMAT - Get Free Report) last posted its quarterly earnings results on Thursday, May 14th. The manufacturing equipment provider reported $2.86 EPS for the quarter, beating analysts' consensus estimates of $2.68 by $0.18. Applied Materials had a net margin of 29.31% and a return on equity of 36.97%. The firm had revenue of $7.91 billion for the quarter, compared to analysts' expectations of $7.68 billion. During the same quarter in the prior year, the company posted $2.39 earnings per share. The business's revenue for the quarter was up 11.4% on a year-over-year basis. Applied Materials has set its Q3 2026 guidance at 3.160-3.560 EPS. On average, research analysts forecast that Applied Materials, Inc. will post 12.14 earnings per share for the current fiscal year.

Applied Materials Announces Dividend

The firm also recently announced a quarterly dividend, which will be paid on Thursday, September 10th. Shareholders of record on Thursday, August 20th will be issued a $0.53 dividend. The ex-dividend date of this dividend is Thursday, August 20th. This represents a $2.12 dividend on an annualized basis and a dividend yield of 0.4%. Applied Materials's dividend payout ratio (DPR) is presently 19.91%.

Insider Transactions at Applied Materials

In other news, CEO Gary E. Dickerson sold 71,727 shares of the company's stock in a transaction on Tuesday, June 16th. The stock was sold at an average price of $593.75, for a total transaction of $42,587,906.25. Following the transaction, the chief executive officer directly owned 1,695,164 shares of the company's stock, valued at $1,006,503,625. This represents a 4.06% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available through the SEC website. Also, Director Thomas J. Iannotti sold 9,250 shares of Applied Materials stock in a transaction dated Tuesday, June 16th. The stock was sold at an average price of $599.77, for a total value of $5,547,872.50. Following the completion of the sale, the director owned 40,559 shares of the company's stock, valued at $24,326,071.43. The trade was a 18.57% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last ninety 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

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in AMAT. Brighton Jones LLC increased its position in Applied Materials by 28.0% during the fourth quarter. Brighton Jones LLC now owns 12,674 shares of the manufacturing equipment provider's stock valued at $2,061,000 after acquiring an additional 2,771 shares during the last quarter. Sivia Capital Partners LLC boosted its position in Applied Materials by 26.7% in the second quarter. Sivia Capital Partners LLC now owns 3,225 shares of the manufacturing equipment provider's stock worth $590,000 after purchasing an additional 679 shares during the last quarter. Forefront Wealth Partners LLC bought a new stake in shares of Applied Materials during the 2nd quarter valued at about $410,000. Schnieders Capital Management LLC. grew its stake in shares of Applied Materials by 30.1% during the 2nd quarter. Schnieders Capital Management LLC. now owns 15,003 shares of the manufacturing equipment provider's stock valued at $2,747,000 after purchasing an additional 3,469 shares during the period. Finally, Sei Investments Co. increased its position in shares of Applied Materials by 59.3% during the 2nd quarter. Sei Investments Co. now owns 422,694 shares of the manufacturing equipment provider's stock valued at $77,383,000 after purchasing an additional 157,426 shares during the last quarter. Institutional investors own 80.56% of the company's stock.

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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