Applied Materials (NASDAQ:AMAT) Shares Down 6.7% - Here's What Happened

Key Points

• Applied Materials shares fell 6.7% to $464.24 amid broad semiconductor weakness and profit-taking after a strong AI-driven rally; trading volume was 36% above its average.
• The company presented an optimistic long-term outlook, targeting more than two percentage points of wafer-fabrication-equipment market-share gains by 2030 and opening its planned $5 billion EPIC Center to accelerate AI-era semiconductor innovation.
• Despite constructive analyst sentiment and stronger-than-expected recent earnings, the stock’s roughly 40x earnings valuation leaves it vulnerable to concerns about slowing AI capital spending and execution risks tied to its major investments.

Applied Materials, Inc. (NASDAQ:AMAT - Get Free Report) dropped 6.7% during mid-day trading on Tuesday. The stock traded as low as $452.81 and last traded at $464.24. 10,668,533 shares traded hands during mid-day trading, an increase of 36% from the average daily volume of 7,863,136 shares. The stock had previously closed at $497.53.

Applied Materials News Roundup

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

• Positive Sentiment: Applied Materials outlined an optimistic multi-year outlook at its SEMICON West investor presentation, targeting more than two percentage points of wafer-fabrication-equipment market-share gains by 2030. Management also expects eBeam equipment revenue to reach $2 billion in 2026 and semiconductor-services revenue to exceed $12 billion by 2030. Applied Materials Set to Outperform as AI Drives Sustained Demand for Wafer Fab Equipment
• Positive Sentiment: The company opened its EPIC Center in Sunnyvale, a planned $5 billion collaborative research facility intended to accelerate chipmaking advances for AI, advanced packaging and next-generation semiconductor processes. The center includes commitments from chipmakers, equipment partners and universities. Applied Materials Unveils $5 Billion EPIC Center
• Positive Sentiment: Analyst support remains constructive: Bank of America reiterated a Buy rating and $650 price target, while Erste Group modestly raised its FY2027 earnings estimate to $18.59 per share. Applied Materials also continues to expand partnerships, including work with Intel on transistors, interconnects and packaging.
• Neutral Sentiment: The EPIC Center and automation strategy could improve long-term growth, but the scale of the investment and the company’s plan to grow revenue without proportional hiring may increase execution concerns.
• Negative Sentiment: Near-term pressure is being driven by broad semiconductor weakness: the South Korean KOSPI fell sharply, prompting declines in chip stocks including Applied Materials, Lam Research and KLA. Investors are also locking in gains after a substantial AI-driven rally.
• Negative Sentiment: Valuation is amplifying the selloff. Applied Materials trades near 40 times earnings, leaving the stock vulnerable to concerns that AI-related capital spending may slow or that expected growth is already reflected in the share price.

Analyst Upgrades and Downgrades

Several brokerages recently commented on AMAT. William Blair initiated coverage on Applied Materials in a research report on Tuesday, August 11th. They issued a "market perform" rating for the company. HC Wainwright set a $850.00 price target on shares of Applied Materials in a report on Monday, June 29th. Craig Hallum increased their price objective on shares of Applied Materials from $530.00 to $585.00 and gave the company a "buy" rating in a research note on Friday, August 14th. Evercore raised their price objective on shares of Applied Materials from $515.00 to $700.00 and gave the stock an "outperform" rating in a report on Friday, June 26th. Finally, TD Cowen reiterated a "buy" rating and set a $700.00 target price on shares of Applied Materials in a research report on Friday, August 14th. One investment analyst has rated the stock with a Strong Buy rating, thirty have assigned a Buy rating and eight have issued a Hold rating to the stock. According to data from MarketBeat.com, Applied Materials presently has a consensus rating of "Moderate Buy" and a consensus price target of $640.20.

Applied Materials Stock Down 6.7%

The stock has a market cap of $368.42 billion, a price-to-earnings ratio of 40.02, a PEG ratio of 1.41 and a beta of 1.60. The company has a debt-to-equity ratio of 0.20, a quick ratio of 1.79 and a current ratio of 2.42. The firm's 50-day simple moving average is $488.47 and its two-hundred day simple moving average is $483.54.

Applied Materials (NASDAQ:AMAT - Get Free Report) last released 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. The company had revenue of $9.12 billion during the quarter, compared to the consensus estimate of $8.99 billion. Applied Materials had a return on equity of 38.02% and a net margin of 30.05%. The firm's quarterly revenue was up 24.8% on a year-over-year basis. During the same quarter in the previous year, the company posted $2.48 earnings per share. Applied Materials has set its Q4 2026 guidance at 3.820-4.220 EPS. On average, sell-side analysts expect that Applied Materials, Inc. will post 12.79 EPS for the current fiscal year.

Applied Materials Dividend Announcement

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, December 10th. Shareholders of record on Thursday, November 19th will be issued a dividend of $0.53 per share. This represents a $2.12 annualized dividend and a yield of 0.5%. The ex-dividend date of this dividend is Thursday, November 19th. Applied Materials's payout ratio is currently 18.28%.

Insider Buying and Selling at Applied Materials

In other news, Director Judy Bruner sold 1,000 shares of the firm's stock in a transaction dated Tuesday, September 8th. The shares were sold at an average price of $465.00, for a total value of $465,000.00. Following the transaction, the director owned 25,544 shares of the company's stock, valued at approximately $11,877,960. This trade represents a 3.77% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through this hyperlink. Also, CFO Brice Hill sold 7,500 shares of Applied Materials stock in a transaction that occurred on Tuesday, August 25th. The stock was sold at an average price of $479.25, for a total transaction of $3,594,375.00. Following the sale, the chief financial officer owned 128,613 shares of the company's stock, valued at approximately $61,637,780.25. This represents a 5.51% decrease in their position. The SEC filing for this sale provides additional information. In the last three months, insiders have sold 9,225 shares of company stock worth $4,454,181. Company insiders own 0.30% of the company's stock.

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently made changes to their positions in the stock. JFS Wealth Advisors LLC lifted its position in Applied Materials by 4.3% during the second quarter. JFS Wealth Advisors LLC now owns 409 shares of the manufacturing equipment provider's stock worth $296,000 after buying an additional 17 shares in the last quarter. Innovative Asset Advisors Group LLC boosted its position in shares of Applied Materials by 2.1% during the second quarter. Innovative Asset Advisors Group LLC now owns 961 shares of the manufacturing equipment provider's stock worth $695,000 after buying an additional 20 shares during the period. Stonebridge Financial Group LLC lifted its position in shares of Applied Materials by 2.1% during the second quarter. Stonebridge Financial Group LLC now owns 1,003 shares of the manufacturing equipment provider's stock worth $725,000 after purchasing an additional 21 shares in the last quarter. N.E.W. Advisory Services LLC raised its stake in shares of Applied Materials by 5.9% in the second quarter. N.E.W. Advisory Services LLC now owns 377 shares of the manufacturing equipment provider's stock valued at $273,000 after acquiring an additional 21 shares in the last quarter. Finally, IMG Wealth Management Inc. grew its holdings in Applied Materials by 13.0% during the 2nd quarter. IMG Wealth Management Inc. now owns 183 shares of the manufacturing equipment provider's stock worth $132,000 after acquiring an additional 21 shares in the last quarter. 80.56% of the stock is currently owned by institutional investors.

About Applied Materials

Applied Materials, Inc is a global supplier of equipment, services and software used to manufacture semiconductor chips, flat-panel displays and other advanced electronic products. Its technologies help customers build and enhance materials at the nanoscale, supporting processes such as deposition, etching, inspection, metrology and packaging.

The company's offerings include semiconductor manufacturing systems, process-control and inspection equipment, and services designed to improve the performance, productivity and longevity of production equipment.

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