Key Stats for Applied Materials Stock
- Current Price: $603.04
- Target Price (Mid): ~$765
- Street Target: ~$564
- Potential Total Return: ~27% (over ~4.3 years)
- Annualized IRR: ~6% / year
- Earnings Reaction: -0.89% (May 14, 2026)
- Max Drawdown (1yr): -21.60% (September 3, 2025)
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What Happened?
Applied Materials, Inc. (AMAT) spent the first half of 2026 as one of the market’s clearest AI winners, and then a famous bear put a price on the other side of the trade. On June 30, Michael Burry, the investor best known for shorting the 2008 housing market, disclosed a fresh short position in Applied Materials at $729.40, part of a basket that also targeted NVIDIA, Tesla, Caterpillar, and the broader semiconductor index. Two sessions later, the stock proved his timing right.
On July 2, AMAT dropped 7.35% to close at $603.04, a decline of $47.87 in a single day. The move was not company-specific. The Philadelphia Semiconductor Index tumbled roughly 7% to 8% as a global chip selloff started in Asia, where SK Hynix and Samsung each fell more than 12% and briefly triggered a circuit breaker on South Korea’s Kospi. The trigger was a report that SK Hynix is slowing its high-bandwidth memory expansion, which the market read as a signal that the AI buildout could be cooling. Investors were taking profits after the VanEck Semiconductor ETF gained about 82% in the first six months of the year. Burry did not cause the drop, but he had named the exact fear the market was now pricing.
That is the setup investors are staring at right now. A stock that ran up more than 130% year to date, at the center of the AI equipment story, just handed back a week of gains while a credible bear called the whole cycle “the beginning of the end.” The question underneath the noise is simple and unresolved: is $603 a discount on a durable franchise, or the first crack in a stock that ran too far?
What Burry Is Actually Betting Against
Burry’s argument is about extension, not fundamentals. He noted the semiconductor index was trading at a historically high stretch above its 200-day moving average, a level he compared to 2000. His view is that the recent rally, fueled by large South Korean capital spending announcements, marks a cycle peak rather than a fresh leg higher. It is a valuation and positioning call, and it lands on a stock that genuinely does not screen cheap.
Applied trades at roughly 40.82x NTM P/E (next twelve months’ price relative to forward earnings) and about 34.77x NTM EV/EBITDA per TIKR. Both sit far above where the stock traded for most of the past decade. The bear case does not require Applied to be a bad business. It only requires the multiple to compress back toward its own history while the cycle cools. That is the risk Burry is pressing.
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The Fundamental Case the Selloff Ignored
Here is the tension. While the market was selling the sector, Applied spent late June making its most detailed long-term case in years. On June 26, the company held a DRAM and Advanced Packaging Master Class, laying out exactly why its tools become more essential as AI memory scales. The event drove a wave of analyst target hikes, including Jefferies to $770, B. Riley to $790, and Cantor Fitzgerald to $850. Susquehanna went further days later, lifting its target to a Street-high $900.
The company’s own guidance backs the enthusiasm. In its Q2 results, Gary Dickerson, President and CEO of Applied Materials, said the company “delivered record quarterly performance, and we now expect our semiconductor equipment business to grow more than 30 percent in calendar 2026.” That matters because it reframes the July drop: a company guiding to 30% equipment growth is not signaling the demand rollover the selloff feared.
The details behind the upgrades matter more than the headline. Applied’s advanced packaging business, which covers the tools that stack and connect chips into AI accelerators, is on track to grow more than 50% this calendar year to over $2 billion. Kevin Moraes, who leads Applied’s DRAM and packaging strategy, told the Master Class audience the business “more than tripled” between 2020 and 2024 against an original target of merely doubling. That is a franchise compounding faster than management’s own bullish forecasts, which is the opposite of a business rolling over.
The reason is structural. High-bandwidth memory (HBM), the stacked memory bolted onto AI chips, requires far more processing than standard memory. Applied explained that HBM dies can be twice the size of standard DRAM dies, so the industry needs to produce three or four HBM wafers to deliver the same number of bits. More wafers and more process steps mean more equipment, and Applied holds the number one position in HBM packaging. The company also expects the DRAM equipment market to be more than twice the size of the NAND market for the foreseeable future, a mix shift that favors exactly the tools Applied leads.
Why the DRAM Roadmap Is a Multi-Year Tailwind
The Master Class detail search cannot surface what makes the bull case concrete. Sony Varghese, who spent over 20 years in the DRAM industry before joining Applied, walked through five separate DRAM inflections coming over the next several years: greater use of EUV patterning, foundry-logic transistor techniques migrating into memory, a new CMOS-bonded array architecture, a space-efficient 4F2 design, and eventually 3D DRAM. Each transition adds process steps that Applied’s deposition, etch, and epitaxy tools are built to serve.
The company put numbers on it. Moraes said Applied delivered more than $1 billion from its DRAM patterning products between 2020 and 2024, and now believes it can generate more than four times that over the next five years. On the periphery transistor and wiring side, Applied delivered more than $2 billion over the same window and expects more than three times that ahead. As memory makers move to 3D DRAM, which Varghese noted “will be very different from 3D NAND,” the materials intensity climbs in ways that play to Applied’s strengths in conductor etch and epitaxy. That is a roadmap measured in nodes and years, not quarters.
Where the Peer Comparison Leaves It
Against its closest equipment peers, Applied’s premium is defensible on quality but not obviously cheap. On NTM EV/EBITDA, AMAT trades at 34.77x per TIKR’s Competitors page. Lam Research (LRCX) sits at 39.87x and KLA Corporation (KLAC) at 40.99x, so Applied actually trades at a discount to both despite carrying the broadest portfolio in the industry, spanning deposition, etch, thermal processing, metrology, and packaging. ASML Holding (ASML) trades at 36.10x on the same metric.
The comparison flips when you look at the chip designers Applied serves. NVIDIA (NVDA) trades at just 15.60x NTM EV/EBITDA and Broadcom (AVGO) at 18.45x, both growing revenue faster than Applied. The market is paying an equipment supplier a higher multiple than two of the fastest-growing chip designers on earth. That gap is the single hardest thing for a bull to defend, and it is precisely the imbalance Burry is targeting. The premium holds only if Applied’s cross-cycle breadth and record margins prove more durable than the market’s fear of a memory air pocket.
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TIKR Advanced Model Analysis
- Current Price: $603.04
- Target Price (Mid): ~$765
- Potential Total Return: ~27%
- Annualized IRR: ~6% / year
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Using the mid-case, the TIKR model values Applied at around $765, implying roughly 27% total return from $603.04, or about 6% annualized over the next several years. The mid case is the honest number to anchor on here, because it captures the core tension: there is upside to the target, but the annualized return is modest precisely because the stock already priced in much of the good news during its 2026 run.
The model rests on two revenue CAGR drivers: leading-edge foundry-logic tied to the gate-all-around transistor transition (the next-generation chip architecture that wraps the gate around the channel for better performance), and DRAM plus advanced packaging, where HBM demand keeps multiplying the wafer area and process steps Applied serves. The margin driver is value-based pricing on differentiated tools, which pushed company-wide LTM gross margin to 49.0% per TIKR. Brice Hill, Senior Vice President and CFO of Applied Materials, framed the demand backdrop plainly: “The growth in AI that Applied has been investing for is now in full force.” The primary risk is the memory cycle: if DRAM customers reshuffle capital spending, as the SK Hynix report hinted, the order pipeline that justifies the multiple thins quickly.
The upside case is that AI memory and packaging demand stays supply-constrained through 2028, and the high case plays out, pushing the stock well above the mid-case path. Even the model’s low case still lands above today’s price on a multi-year horizon, though at a far thinner annualized return. The downside case is that cleanroom capacity arrives faster than expected, the cycle peaks early, the multiple compresses toward its historical median, and Burry’s 30% correction thesis gets its proof.
Conclusion
The debate resolves on one number: fiscal Q3 revenue, which Applied is expected to report around August 13, 2026. Management guided to approximately $8.95 billion, near 23% year-over-year growth. A result at or above that midpoint, paired with continued language about multi-quarter customer visibility, confirms the order book is still converting the June Master Class roadmap into revenue, and reframes the July selloff as a sector-wide profit-taking event rather than a fundamental turn. A soft guide, or any wobble in visibility commentary, hands the bears their catalyst and validates the fear Burry named. Until then, the July 2 drop is a repricing of sentiment, not of the business. August 13 is when the data decides which one it was.
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Should You Invest in Applied Materials?
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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!
