Key Takeaways
- Applied Materials (AMAT) is up approximately 30% in 2026, despite falling 55% from its June high to close at $333 on November 6.
- ASML (ASML) reported record third-quarter sales of €11.7 billion, reflecting continued investment in advanced semiconductor manufacturing.
- Micron Technology (MU) invested $27.4 billion in net capital expenditures during fiscal 2026, highlighting the scale of memory manufacturers’ expansion.
- Applied Materials looks potentially undervalued relative to its earnings forecasts, although November 12 results will test whether the company’s growth outlook remains intact.
What Happened?
Applied Materials (AMAT) stock has gained approximately 30% year to date, despite plunging nearly 55% from its June 30 high of $739.67 to $333 on November 6, according to historical trading data.
The sell-off contrasts with continued semiconductor investment. ASML (ASML) reported record third-quarter sales of €11.7 billion, while Micron Technology (MU) invested $27.4 billion in net capital expenditures during fiscal 2026.
Applied Materials’ financial performance has also remained strong.
In May, the company reported record fiscal second-quarter revenue of $7.91 billion, an 11% year-over-year increase.
Momentum accelerated in August, when third-quarter revenue climbed 25% to a record $9.12 billion, while non-GAAP EPS increased 41% to $3.50.
Management also guided for fourth-quarter revenue of approximately $10.25 billion, plus or minus $500 million, supported by continued demand for semiconductor manufacturing equipment.
CEO Gary Dickerson highlighted the company’s outlook in its third-quarter earnings announcement, saying the company expects “another strong growth year for Applied Materials in 2027.”
However, investors have grown increasingly cautious about the sustainability of semiconductor equipment spending. Applied Materials’ October investor presentation did not provide a specific industrywide equipment-spending forecast, while supply constraints discussed by Lam Research added uncertainty about how quickly manufacturers could meet demand.
These developments have added uncertainty about the semiconductor equipment outlook, even as Applied Materials continues reporting strong financial results. The stock’s sharp decline suggests investors are reassessing how sustainable the industry’s earnings growth will be.
Is Applied Materials Undervalued or Overvalued?
Applied Materials appears potentially undervalued relative to its projected earnings growth, although the stock remains exposed to the semiconductor capital spending cycle.
According to the supplied TIKR estimates, normalized EPS is projected to rise from $9.42 in fiscal 2025 to $18.56 in fiscal 2027 and $23.89 in fiscal 2028, supported by AI infrastructure investment, advanced memory production, and semiconductor packaging demand.
The company’s forward P/E reached approximately 49x in June before declining to 22x by October 30, close to its five-year average of roughly 21x, according to the supplied TIKR valuation chart.
The 22x multiple reflects the October 30 TIKR snapshot. A separate estimate from Stock Analysis placed Applied Materials’ forward P/E at approximately 19x as of November 6, suggesting a lower valuation, although differences in earnings definitions can produce different multiples across data providers.
That compression makes the stock more attractive if analysts’ earnings forecasts materialize, while ASML’s record quarterly results provide further evidence of demand across the semiconductor equipment industry.
Over the next 12 months, sustained AI infrastructure spending and memory capacity expansion could support Applied Materials’ earnings growth. However, China export restrictions, weaker equipment orders, and declining cash conversion remain significant risks.
What Investors Should Watch Next
Applied Materials is scheduled to report fiscal fourth-quarter results on November 12, with investors closely watching revenue guidance and management’s outlook for fiscal 2027.
The company previously guided for fourth-quarter revenue of approximately $10.25 billion, while the supplied TIKR consensus estimate calls for fiscal 2027 revenue of approximately $46.4 billion.
Its upcoming January quarter will also contain 14 weeks rather than the typical 13, making underlying weekly revenue growth important when evaluating management’s outlook.
A strong forecast could reinforce the case that Applied Materials’ share-price decline has outpaced changes in its earnings potential, while weaker equipment orders or disappointing guidance could trigger further downside.
Bottom line: It is not necessarily too late to buy Applied Materials. The stock’s steep pullback has created a potentially attractive opportunity relative to its projected earnings growth, but the November 12 report will be an important test of whether that growth can justify its valuation.
So what is Applied Materials stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
