Stock Analysis | Applied Materials Outlook - Technical Weakness and Mixed Analyst Sentiment

Market Snapshot

Headline Takeaway: Applied Materials (AMAT) is showing technical weakness with bearish signals dominating and analysts remaining neutral, despite a recent price rise of 4.58%.

News Highlights

Recent news points to ongoing shifts in the semiconductor industry driven by global policy, sustainability, and AI growth:

• McKinsey on Tariffs and Chip Supply Chains: New research highlights the potential disruption from U.S. tariffs in the semiconductor sector, which could impact Applied Materials' business through supply chain reconfigurations.
• Japan-U.S. Cooperation on Semiconductors: Reports indicate Japan is preparing proposals for collaboration with the U.S. on rare earths and semiconductors. This could boost global chip manufacturing resilience and indirectly benefit AMAT.
• Indie Semiconductor’s Financial Performance: A report highlights indie Semiconductor's negative ROIC (-18.68%), underlining the competitive and capital-intensive nature of the industry, which could pressure AMAT's fundamentals if it doesn't maintain profitability.

Analyst Views & Fundamentals

Analyst sentiment is mixed, with two firms—Barclays and UBS—offering neutral ratings in the last 20 days. The simple average rating is 3.00, while the weighted rating based on historical performance is 2.03. Despite this, price trends show a 4.58% rise, which suggests a mismatch with current analyst expectations.

Fundamental Highlights:

• EV/EBIT of 45.75% - internal diagnostic score: 3.00
• Basic EPS YoY growth rate of -8.89% - internal diagnostic score: 3.00
• Net Profit YoY growth rate of -11.20% - internal diagnostic score: 3.00
• Cash-UP of 60.98% - internal diagnostic score: 4.00
• CFOA (Operating Cash Flow per Share) of 4.67% - internal diagnostic score: 3.00
• Interest Coverage Ratio of 34.64% - internal diagnostic score: 3.00
• Net Cash from Operating Activities per Share YoY of 35.22% - internal diagnostic score: 1.00

While some fundamentals show signs of strength (e.g., operating cash flow and cash metrics), others like net profit and earnings per share are in negative territory. This suggests a mixed operational outlook.

Money-Flow Trends

Big-money investors are showing a positive trend in fund flows. The extra-large inflow ratio is at 51.13%, compared to small inflow ratio of 48.96%, indicating institutional confidence. However, retail sentiment is more divided, with small and medium trends leaning negative. The overall inflow ratio of 50.32% suggests a slight net inflow into AMAT, but caution is warranted due to technical signals.

Key Technical Signals

Applied Materials is struggling from a technical standpoint. Only 3 bearish indicators and 0 bullish are active, with key signals including:

• WR Overbought (score: 2.53, internal diagnostic score)
• WR Oversold (score: 3.11, internal diagnostic score)
• Bearish Engulfing (score: 1.19, internal diagnostic score)

Key recent patterns:

• 2025-07-29: Bearish Engulfing pattern triggered
• 2025-07-24 & 2025-07-25: WR Oversold signals
• 2025-08-12 & 2025-08-13: WR Overbought signals

These conflicting signals suggest a weak trend and a market in flux, with no clear direction. Investors should be cautious of a potential pullback as bearish momentum builds.

Conclusion

Applied Materials currently faces a challenging landscape from both technical and sentiment perspectives. Despite a recent price rise of 4.58%, the technical indicators and analyst ratings are not aligned with this upward movement. With internal technical score at 2.28 and key bearish signals active, it may be prudent for investors to consider waiting for a pull-back before entering or adding to positions. Keep an eye on the next earnings report for clarity on fundamentals and guidance for potential reversal or continuation of the current trend.