Applied Materials (AMAT) shares are down about 7.4% today (trading at about $380) after Lam Research (LRCX) said supply-chain constraints held back its December-quarter outlook.
Applied Materials reported nothing. It’s paying for a peer’s guidance, even though that peer forecast a sharp jump in chip-equipment spending for 2027.
What Lam Actually Said
- Lam posted record September-quarter revenue of $8.22 billion, up 22% from June, and guided December-quarter revenue to $8.6 billion (plus or minus $400 million).
- CFO Doug Bettinger said the guide “would have been a bit higher if not for some near-term supply chain constraints.” (He didn’t size it.)
- Lam sees 2026 wafer fab equipment (WFE) spending in the mid-$150 billion range, with a preliminary 2027 figure above $200 billion.
- Lam shares fell about 9% at the open and ASML (ASML) about 4%, while Advanced Micro Devices (AMD), Broadcom (AVGO)and Nvidia (NVDA) also slipped.
Applied’s Multiple Has Already Been Cut in Half
Applied Materials traded at 48.94x next-twelve-month earnings at its July peak. It now sits at 23.19x, well under its 30.80x average.
That’s a 53% de-rating, delivered alongside a record fiscal third quarter. Lam expects to ship December’s delayed tools in the March quarter, though it sees constraints lasting into 2027. At 23x, the stock is pricing in more than a delay.
The Number That Has to Hold
The exposure sits in the estimates. Analysts expect Applied’s revenue to climb from $34.26 billion in fiscal 2026 to $46.37 billion in fiscal 2027. That’s a 35% jump in a year Lam expects industry spending to top $200 billion.
Applied has planned for this kind of bottleneck. In May, CFO Brice Hill said the company had “nearly doubled our manufacturing capacity” and shares customers’ eight-quarter forecasts with suppliers.
Where Applied Materials Stock Goes From Here
The Street hasn’t flinched. The mean target was $628 on October 21, barely below September’s $639 and about 65% above today’s price.
Today looks like the market treating a timing problem as a demand problem. Applied’s November 12 report will show whether fiscal 2027 still points toward $46 billion. If it does, 23x is cheap.
TIKR Tracks 40 Analysts on Applied Materials. How Many Say “Buy”?
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