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Why Applied Materials (AMAT) Shares Are Trading Lower Today

ⓘ This article is third-party content and does not represent the views of this site. We make no guarantees regarding its accuracy or completeness.

AMAT Cover Image

What Happened?

Shares of semiconductor machinery manufacturer Applied Materials (NASDAQ: AMAT) fell 3.1% in the afternoon session after semiconductor stocks fell sparked by a disappointing revenue report from peer company Marvell Technology. 

The downturn was triggered after Marvell reported second-quarter data center revenue that came in below consensus estimates, causing its stock to plunge and dragging other chipmakers down with it. The negative sentiment rippled through the industry, impacting numerous major players. Applied Materials was among the affected companies, with its stock declining more than 2%. Other notable semiconductor firms like Broadcom, Lam Research, Nvidia, and Advanced Micro Devices also saw their shares fall, highlighting widespread investor concern across the sector.

The shares closed the day at $160.83, down 2.7% from previous close.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Applied Materials? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Applied Materials’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 14 days ago when the stock dropped 11.7% on the news that the company issued disappointing financial guidance for the upcoming third quarter, which overshadowed its better-than-expected second-quarter results. The semiconductor equipment supplier reported second-quarter revenue of $7.30 billion and adjusted earnings per share (EPS) of $2.48, beating analysts' estimates. However, the company's outlook for the third quarter pointed to a slowdown. Applied Materials projected revenue of $6.7 billion at the midpoint, well below the $7.30 billion analysts had forecasted. The adjusted EPS guidance was also weak, with a midpoint of $2.11, compared to the consensus estimate of $2.38. This weaker-than-expected forecast for the upcoming quarter signaled potential challenges ahead, causing investors to sell off the stock despite the strong performance in the reported quarter.

Applied Materials is down 1.8% since the beginning of the year, and at $160.84 per share, it is trading 24.8% below its 52-week high of $213.89 from October 2024. Investors who bought $1,000 worth of Applied Materials’s shares 5 years ago would now be looking at an investment worth $2,611.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

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