Key Stats for Applied Materials Stock
- Pre-market Price Change for Applied Materials stock: -4%
- $AMAT Share Price as of Nov. 13: $223
- 52-Week High: $243
- $AMAT Stock Price Target: $223
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What Happened?
Applied Materials (AMAT) stock dropped 4% in pre-market despite the semiconductor equipment maker beating Wall Street’s expectations for its fiscal fourth quarter.
Applied Materials reported adjusted earnings of $2.17 per share on revenue of $6.8 billion, topping analyst estimates of $2.10 per share on $6.67 billion in revenue.
The disappointing reaction centers on the company’s cautious near-term outlook and ongoing headwinds in China.
Applied Materials guided first-quarter revenue to $6.85 billion (plus or minus $500 million) with earnings of $2.18 per share.
More importantly, management warned that the semiconductor equipment business would remain “flattish” through the first half of 2026 before seeing significant growth in the back half of the year.
CEO Gary Dickerson acknowledged that China’s share of systems and service revenues declined to 25% in the fourth quarter, down from 28% for the full fiscal year.
AMAT expects China spending to weaken further in 2026 as the country digests years of elevated investment.
Trade restrictions have more than doubled their impact on Applied’s China business, now affecting over 20% of the China wafer fab equipment market compared to around 10% in fiscal 2024.
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What the Market Is Telling Us About AMAT Stock
Today’s selloff in AMAT stock suggests investors are focused on the delayed revenue recovery rather than the company’s longer-term AI positioning.
The flat first-half outlook disappointed those hoping for a stronger start to calendar 2026, despite management’s emphasis on improving customer visibility and substantial second-half growth driven by AI-driven data center demand.
The China situation remains a persistent overhang on AMAT stock. While Applied insists it’s holding market share in areas where it can still compete, the reality is that non-U.S. equipment suppliers don’t face the same restrictions.
This creates a structural disadvantage in a market that’s been running at nearly 40% of global wafer fab equipment spending.
That said, the long-term AI thesis for AMAT stock remains intact and possibly stronger than ever. Dickerson returned from meetings in Asia with dramatically improved customer visibility, in some cases extending two years out.
The company is expecting significant production increases for advanced factories in the second half of 2026, with leading-edge foundry logic and DRAM being the fastest-growing segments—both areas where Applied holds strong number-one positions.
Applied’s technology leadership in gate-all-around transistors, backside power delivery, and high-bandwidth memory packaging positions it well as AI computing infrastructure scales.
AMAT believes it can capture more than 50% of its served market in gate-all-around applications. Management also expects to double its advanced packaging business from $1.5 billion today to $3 billion over the next few years.
Investors willing to look past the near-term digestion in China and first-half softness may find value at current levels, especially with gross margins at 25-year highs and a strong position in the technologies enabling AI’s next phase of growth.
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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 stocks mentioned. Thank you for reading, and happy investing!
