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Applied Materials (AMAT) stock has come under pressure in recent weeks, but the options market believes the company’s upcoming earnings are unlikely to be its savior.
Consensus is for the semiconductor equipment manufacturer to record $3.38 in earnings per share (EPS) for its fiscal Q2 on Aug. 13 — a more than 36% increase on a year-over-year basis.
Still, options pricing suggests it might not prove sufficient for Applied Materials shares, which are down more than 23% versus their year-to-date high, to stage a notable comeback.
Options Traders Are Bearish on Applied Materials Stock
The put-to-call ratio on AMAT contracts expiring Aug. 14 sits at 1.4x currently, indicating a very strong bearish skew.
And the lower price on those contracts, according to Barchart data, sits at under $517 at the time of writing, signaling potential for a more than 6% decline following the release of Q2 earnings.
The options market sentiment is particularly significant as it defies the technical setup heading into Applied Materials’ quarterly print.
AMAT shares soared past their 20-day moving average (MA) on Wednesday, with an RSI in the early 50s indicating rising buying pressure.
AMAT Shares Aren’t Really Inexpensive to Own
The dovish options market view on Applied Materials stock ahead of the Q2 release likely reflects valuation concerns.
At the time of writing, the semiconductor equipment firm is trading at a forward price-to-earnings (P/E) multiple of nearly 43x, which makes it infinitely more expensive to own than Nvidia (NVDA) at about 24x.
Additionally, insider activity surrounding AMAT has been decidedly bearish as well, with 69 sell transactions recorded in the trailing 12 months against not even a single buy.
That said, the firm pays a small dividend yield of 0.39% currently, which makes it somewhat more attractive to own for income-focused investors.
Wall Street Remains Bullish on Applied Materials
Interestingly, Wall Street firms disagree with the derivatives market heading into Applied Materials' second-quarter earnings on Aug. 13.
According to Barchart, the consensus rating on AMAT stock remains at “Strong Buy,” with the mean price target of $630 indicating potential for a 15% rally through the remainder of 2026.
