Applied Materials shares plunged 12.71% on Friday, opening at $164.31 compared to Thursday’s close of $188.24. The semiconductor equipment maker’s stock decline came despite beating third-quarter expectations with revenue of $7.30 billion, up 8% year-over-year, and adjusted earnings of $2.48 per share, both above consensus estimates.
The selloff was triggered by conservative fourth-quarter guidance that fell short of analyst expectations. Management forecast revenue of approximately $6.70 billion, well below the $7.33 billion analyst consensus, while projected adjusted earnings per share of $2.11 missed the $2.39 estimate. CFO Brice Hill cited sluggish Chinese demand and uneven orders, while CEO Gary Dickerson pointed to increased macroeconomic and trade-policy uncertainty, particularly regarding export licenses to China.
The weak outlook prompted several analyst downgrades. Bank of America downgraded Applied Materials to Neutral from Buy and cut its price target to $180, citing company-specific headwinds including weak demand visibility and China-related pressure. Summit Insights also downgraded the stock to Hold from Buy, warning that U.S. export restrictions could drive pull-in orders in China, creating excess capacity that may take several quarters to resolve.
Stifel maintained its Buy rating but lowered its price target to $180 from $195, with analyst Brian Chin noting that while long-term fundamentals remain sound, near-term guidance warrants a more conservative valuation.
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