Applied Materials, Inc.

(NASDAQ Global Select)
Back to all articles
Slightly Bearish -15

Applied Materials Just Dropped 29% In a Month: Will November 12 Earnings Rescue or Break AMAT Stock?

Earnings report Financial outlook AI-generated analysis

πŸ“‰ AMAT stock has dropped 29% in a month to $381.01, trading at 23x forward earnings ahead of its November 12 Q4 FY2026 report.

🀝 The broader chip equipment sector is under pressure due to Intel's forecast miss and concerns over AI infrastructure spending.

🎯 Applied Materials targets 54% non-GAAP gross margins and 40% operating margins by 2030, up from current levels of 50.4% and lower.

πŸ“ˆ The company expects its Applied Global Services revenue to grow over 20% this year, reaching more than $12 billion by 2030.

πŸ‡¨πŸ‡³ China supplied 28% of AMAT's record Q3 revenue of $9.12 billion, making new export restrictions a critical earnings wildcard.

πŸ“¦ Management expects packaging revenue to grow more than 70% in calendar 2026 to improve AI compute performance.

πŸ’° Applied Materials guided for Q4 revenue of $10.25 billion plus or minus $500 million and non-GAAP EPS of $4.02.

πŸ› οΈ Ramp costs, including hiring and training customer-support engineers, are currently offsetting some of the company's margin gains.

Bullish Signals
  • Applied Materials has set an aggressive long-term plan targeting 54% non-GAAP gross margins and 40% operating margins by 2030.
  • The company expects its Applied Global Services revenue to grow more than 20% this calendar year, exceeding $12 billion by 2030.
  • Management projects packaging revenue will grow more than 70% in calendar 2026, positioning it as a key area for AI compute performance.
Risk Factors
  • AMAT shares have shed nearly a third of their value in a single month following sector-wide pessimism over chip equipment demand.
  • China supplied 28% of the company's record Q3 revenue, creating significant exposure to potential new export restrictions.
  • The company's trailing gross margin of 49.4% is below its 2030 target, and ramp costs are currently offsetting near-term margin gains.
Full Analysis
Applied Materials (AMAT) shares have declined approximately 29% over the past month to $381.01, trading at 23x forward earnings ahead of its November 12 Q4 FY2026 earnings report. This significant selloff follows a broader sector downturn triggered by Intel's disappointing forecast and concerns regarding AI spending, causing peers Lam Research and KLA to drop similarly. The company recently unveiled an ambitious long-term plan at SEMICON West targeting 54% non-GAAP gross margins and 40% operating margins by 2030. Applied Materials aims to gain over 2 percentage points in wafer fab equipment market share during this period, with a specific focus on growing its Applied Global Services division, which is projected to exceed $12 billion by 2030. Key risks for AMAT include China accounting for 28% of its record Q3 revenue and potential new export restrictions. Additionally, the company's current trailing gross margin of 49.4% lags behind its 2030 targets, while ramp costs related to hiring customer-support engineers are currently offsetting some margin gains. Investors will closely watch the November 12 earnings report for guidance on Q4 revenue and EPS, as well as management's commentary on China demand stability. A clean beat with upbeat guidance could support a recovery, whereas soft margins or cautious remarks regarding international markets could reinforce bearish sentiment.