Applied Materials Tumbles as Downgrade and Sector Woes Sink 48th-Ranked Volume

On August 20, 2025, Applied Materials (AMAT) closed down 0.78% with a trading volume of $1.49 billion, ranking 48th in market activity. The stock faced renewed pressure as Daiwa Securities downgraded its rating to Neutral from Outperform, slashing the price target to $170 from $185. The move followed weaker-than-expected guidance for the October quarter, with revenue projections of $6.7 billion falling $631 million below consensus estimates. Daiwa highlighted cooling China demand, delayed export licenses, and reduced spending by key clients like Intel and Samsung as critical headwinds.

Analysts emphasized structural challenges in the semiconductor equipment sector, including sluggish demand outside AI applications and inventory overhang from prior years. Despite strong third-quarter results—revenue of $7.302 billion and earnings of $2.48 per share—guidance for the next quarter disappointed, prompting multiple firms to lower price targets. Bernstein SocGen and UBS reduced their targets to $195 and $180 respectively, while CFRA and Cantor Fitzgerald trimmed theirs to $167 and $200. These adjustments reflected concerns over trade uncertainties and extended technology transitions.

While Applied Materials maintains a robust balance sheet with a current ratio of 2.5x and moderate debt, the market remains cautious. Daiwa noted the company’s valuation is already near its five-year average, limiting near-term upside potential. Analysts await clearer signals of demand recovery, particularly in China and leading-edge chip manufacturing, before revising their outlook. The stock’s RSI has entered oversold territory, but institutional optimism remains constrained by persistent sector-wide risks.

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