What happens when a tech giant’s impressive earnings report can’t shield it from a market nosedive? As Applied Materials Inc. (NASDAQ:AMAT) experiences a surprising slump, analysts weigh in on the forces at play behind the scenes. Shares of Applied Materials declined in early trading on Friday, despite the company’s upbeat fiscal third-quarter results reported on Thursday.
The announcement came amid an exciting earnings season. Here are some key analyst takeaways.
BofA Securities On Applied Materials
Analyst Vivek Arya downgraded the rating from Buy to Neutral, while reducing the price target from $190 to $180.
Applied Materials has high exposure to the over-supplied mature node, or ICAPS (IoT, Communications, Automotive, Power and Sensors), especially in China, Arya said in the downgrade note. The company also has high exposure to "certain leading-edge customers," like Intel Corp (NASDAQ:INTC), he added.
Both these are likely to continue weighing on Applied Materials' growth in the medium term, the analyst stated. The company believes the uncertainty could persist, "making it tougher for the stock to outperform despite reasonable valuation," he further wrote.
Check out other analyst stock ratings.
Goldman Sachs On Applied Materials
Analyst James Schneider reiterated a Buy rating, while cutting the price target from $225 to $215.
Applied Materials issued weak guidance mainly due to a decline in China's equipment spending, owing to the need to digest capacity additions, Schneider said. The company projected a sequential decline of around $500 million in China revenue, he added.
"Driven by greater customer concentration and nonlinear demand trends, Applied guided leading-edge logic to decline in the October quarter," the analyst wrote. Management guided to revenue of $6.70 billion and non-GAAP earnings of $2.11 per share at the midpoint, both of which are well below consensus estimates of $7.30 billion and $2.37 per share, respectively, he further stated.
Needham On Applied Materials
Analyst Charles Shi maintained a Buy rating and price target of $250.
Applied Materials reported its quarterly revenues around $100 million above the midpoint of guidance but issued a disappointing revenue outlook for October, Shi said. The revenue guidance came in around $600 million below consensus estimates and represents "the largest guidance miss we have seen from AMAT in many years," he added.
Management expects a sequential decline in revenue of $700 million due to a $500 million sequential decline in China, $500 million short in GAA (Gate-All-Around) revenue, and $300 million upside in non-China ICAPS, the analyst stated. "Looking forward into FY26, management still appears bullish on DRAM, but bearish on China, and cautious on the timing on leading-edge logic demand," he further wrote.
AMAT Price Action: Applied Mat shares were down 13.26% at $163.27 at the time of publication on Friday, according to Benzinga Pro data.
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