Applied Materials Outlook - Technical Weakness and Mixed Analyst Views

Market Snapshot

Applied Materials (AMAT) appears to be in a volatile trading phase, with mixed signals from both technical indicators and analyst ratings. A weak technical score of 4.28 signals caution, suggesting the market is undecided about the stock’s direction in the near term.

News Highlights

Recent developments in the semiconductor sector may offer some context to AMAT’s mixed fundamentals:

• McKinsey’s report on U.S. tariffs suggests potential structural shifts in the semiconductor supply chain, which could indirectly affect Applied Materials’ business model and customer demand.
• A $750 million outflow from the US Semiconductors ETF (SOXX) in May 2025 points to broader sector uncertainty, potentially impacting AMAT as a major player in the industry.
• Japan’s proposed cooperation with the U.S. on rare earths and semiconductor materials highlights a geopolitical push to reduce dependence on China, which could open up long-term opportunities for AMAT’s supply chain solutions.

Analyst Views & Fundamentals

Analysts remain divided. The simple average rating of AMAT stands at 3.71, while the performance-weighted rating is significantly lower at 2.21, indicating a mismatch between current expectations and past performance.

Despite this, some top analysts have strong historical records. Morgan Stanley’s Joseph Moore, with a 71.4% win rate, and B of A Securities’ Vivek Arya, with a 100.0% win rate, suggest a more cautious neutrality. In contrast, most analysts have underperformed or shown average results.

On the fundamental side, AMAT shows mixed financial performance. Here are the key factors and their internal diagnostic scores (0-10):

• EV/EBIT: 81.18 (Score: 3.00)
• Operating Cash Flow per Share (YoY): -93.77% (Score: 1.00)
• Accounts Receivable Turnover: 2.50x (Score: 2.00)
• Gross Profit Margin (GPM): 49.08% (Score: 2.00)
• Net Profit Growth (YoY): -11.20% (Score: 3.00)
• Net Cash Flow from Operating Activities (CFOA): 4.67% (Score: 3.00)

The fundamental model score is 3.6, reflecting some weakness in earnings and cash flow growth, despite decent margins and asset utilization.

Money-Flow Trends

Money is flowing out of AMAT in all major categories. The fund-flow score is 7.4 (good), but this is a paradox: it reflects strong block investor activity, yet all size categories (from small to extra-large) show negative trends.

• Small-cap investors are showing 48.55% inflow but a negative trend.
• Large and extra-large investors show inflow ratios of ~47.67% and 45.58%, respectively, but all trends are negative.
• Overall inflow ratio is at 46.75%, yet the overall trend is negative, indicating a lack of conviction among big-money players.

Key Technical Signals

The technical analysis of AMAT is mixed but leaning bearish, with a weak technical score of 4.28 and internal diagnostic scores as follows:

• WR Oversold: 3.65 – signals a neutral rise, but limited strength.
• Bearish Engulfing: 1.19 – a clearly bearish pattern, suggesting a potential pullback.
• Bullish Engulfing: 7.99 – a strong bullish signal, indicating a potential reversal.

Over the last five days, the stock has seen alternating bearish and bullish signals: WR Oversold was active multiple times, while Bullish Engulfing appeared on 2025-09-04. This suggests the market is in a volatile and indecisive phase.

Key insights from the technical analysis include:

• Technical indicators show the market is in a volatile state with no clear trend direction.
• Short-term signals are balanced between long and short, advising investors to watch for further market changes.

Conclusion

Applied Materials is at a crossroads. While the fundamental model score (3.6) and technical score (4.28) suggest caution, there are mixed signals from both analyst ratings and money flows. The recent chart patterns suggest a possible reversal, but the bearish engulfing and weak overall trend should not be ignored.

Actionable Takeaway: Investors should consider waiting for a clearer breakout or breakdown before taking a definitive position. A pullback may offer better entry points for those already bullish on the stock’s long-term potential in the semiconductor equipment market.