Applied Materials, Inc.

(NASDAQ Global Select)
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Somewhat Bullish +40

Applied Materials stock: At EUR 363.33, Applied Materials stock falls 4.42 percent

Analyst downgrade Earnings report AI-generated analysis

πŸ“ˆ Applied Materials delivered record third-quarter revenue of USD 9.12 billion, up 25 percent from the prior-year quarter.

πŸ’° GAAP earnings per diluted share increased to USD 3.17, rising from USD 2.22 in the same period last year.

πŸ“Š Gross margins expanded to 50.3 percent on a GAAP basis and 50.4 percent non-GAAP for the quarter.

πŸ“‰ Stock price fell 4.42 percent to EUR 363.33, trading below its recent high of EUR 380.15.

πŸ”» Needham lowered its price target from USD 740.00 to USD 580.00 while maintaining a Buy rating.

πŸ“… Management guided fourth-quarter revenue to USD 10.25 billion plus or minus USD 500 million.

🎯 Non-GAAP EPS guidance for the quarter is set at USD 4.02 plus or minus USD 0.20.

πŸ“ˆ Applied Global Services revenue grew to USD 1.78 billion, up from USD 1.46 billion previously.

⏳ The next earnings report is scheduled for November 12, 2026, covering fiscal fourth-quarter results.

πŸ’Ή The company trades at a forward P/E ratio of 39.66, significantly higher than the sector average of 23.35.

Bullish Signals
  • Applied Materials achieved record third-quarter revenue of USD 9.12 billion, marking a substantial 25 percent year-over-year growth.
  • GAAP earnings per diluted share surged to USD 3.17, more than doubling from the prior-year quarter's USD 2.22.
  • Gross margins improved to 50.3 percent on a GAAP basis and 50.4 percent non-GAAP, indicating strong pricing power or cost control.
  • Applied Global Services revenue increased to USD 1.78 billion, demonstrating growth in its services segment.
  • Management provided solid fourth-quarter revenue guidance of USD 10.25 billion plus or minus USD 500 million.
Risk Factors
  • Stock price declined 4.42 percent to EUR 363.33, trading well below its recent high of EUR 380.15.
  • Needham lowered its price target from USD 740.00 to USD 580.00, signaling a reset in valuation expectations despite strong earnings.
  • The stock trades at a forward P/E ratio of 39.66, which is substantially higher than the sector average of 23.35, suggesting elevated valuation concerns.
  • Investors are weighing the high valuation against recent operating growth, causing the share price to react sharply to analyst target changes rather than just earnings beats.
Full Analysis
Applied Materials reported record third-quarter fiscal 2026 revenue of USD 9.12 billion, representing a 25 percent year-over-year increase from the prior period. GAAP earnings per diluted share rose significantly to USD 3.17 compared to USD 2.22 a year ago, while gross margins expanded to 50.3 percent on a GAAP basis and 50.4 percent non-GAAP. The company also saw growth in its Applied Global Services segment, with revenue reaching USD 1.78 billion. Despite the strong operating performance, the stock price declined approximately 4.42 percent to EUR 363.33 on October 20, 2026. This drop occurred after Needham lowered its price target from USD 740.00 to USD 580.00 while maintaining a Buy rating. The reduction in the analyst target highlights a divergence between current operating results and valuation expectations, with the stock trading at a forward P/E ratio of 39.66 versus a sector average of 23.35. Management provided guidance for the fourth quarter, projecting revenue between USD 10.25 billion and USD 10.75 billion and non-GAAP diluted earnings per share between USD 4.02 and USD 4.22. The company is scheduled to report its next results on November 12, 2026, which will include commentary on demand for fiscal year 2027. Investors are currently weighing the elevated valuation against the robust recent growth figures.