Applied Materials' Modest Gains Hit 58th in Dollar Volume Amid Deteriorating Earnings Outlook

Market Snapshot

Applied Materials (AMAT) rose 0.90% on November 12, 2025, with a trading volume of $1.33 billion, ranking it 58th in terms of dollar volume among U.S. equities. The stock’s modest gain reflects a mixed backdrop ahead of its upcoming fourth-quarter earnings report, which is set for Thursday after market close. Despite the positive intraday move, the company faces broader headwinds, including downward revisions in earnings and revenue forecasts, and a challenging macroeconomic environment for semiconductor equipment manufacturers.

Key Drivers

Earnings and Revenue Forecasts Signal Decelerating Growth

Analysts expect Applied Materials to report fourth-quarter earnings of $2.10 per share, a 9.1% decline from the $2.32 per share recorded in the same period a year ago. Revenue is projected to fall to $6.67 billion, down 4.8% year-over-year. These forecasts reflect a broad consensus of decelerating demand in core markets, driven by weaker capital spending cycles in semiconductor manufacturing and display technologies. Notably, the consensus EPS estimate has been revised downward by 0.4% over the past 30 days, indicating growing skepticism among analysts about the company’s ability to meet expectations.

Segment and Regional Performance Highlights Mixed Trends

Breakdowns of segment and regional revenue estimates underscore divergent dynamics. The Semiconductor Systems segment, which accounts for the majority of AMAT’s revenue, is expected to report $4.75 billion in sales, a 8.3% decline year-over-year. This aligns with broader industry trends of reduced demand for chipmaking equipment as global foundries adjust to oversupply concerns. Conversely, the Display segment is projected to see a sharp rebound, with revenue climbing 66.2% to $350.77 million. This outperformance may reflect recovery in demand for display panels used in consumer electronics, though it remains an anomaly in an otherwise soft environment.

Geographically, the U.S. and European markets are expected to underperform, with geographic net sales in the U.S. declining 37.2% to $723.94 million and European sales falling 24.9% to $303.98 million. These declines contrast with modest gains in Asia-Pacific regions such as Taiwan (+20.8%) and Korea (+16.3%), suggesting a regional shift in manufacturing activity. Analysts attribute these trends to U.S.-China trade tensions and shifting production hubs in the semiconductor supply chain.

Analyst Optimism and Strategic Moves

Despite the bearish revenue outlook, analyst sentiment remains cautiously optimistic. Recent upgrades from major firms—including Stifel, Barclays, and Morgan Stanley—have raised price targets to as high as $250 per share, reflecting confidence in AMAT’s long-term positioning in the semiconductor equipment sector. Stifel analyst Brian Chin, for instance, emphasized the company’s potential to “alleviate investor concerns around China and equity stories” and reiterated a Buy rating with a $250 price target. These upgrades follow AMAT’s announcement of a 4% global workforce reduction, which is expected to incur $160–180 million in restructuring charges. While the move signals cost-cutting efforts, it also raises questions about near-term operational efficiency and employee morale.

Sector Peers and Market Positioning

Applied Materials’ performance is being benchmarked against peers in the semiconductor manufacturing segment. Teradyne and FormFactor, which have already reported Q3 results, showed mixed outcomes: Teradyne delivered 4.3% year-over-year revenue growth, while FormFactor saw a 2.5% decline. Both companies outperformed analyst expectations and saw sharp post-earnings rallies (20.6% and 24.3%, respectively), suggesting a volatile environment for sector stocks ahead of AMAT’s report. Analysts note that AMAT’s consistent track record of beating EPS estimates (13 straight quarters) and revenue expectations (nine of 10 quarters) could provide a floor for its stock, even in a weak quarter.

Dividend and Valuation Considerations

Investors are also weighing AMAT’s dividend yield of 0.80% and its valuation metrics. The company’s 0.80% yield, while modest, remains attractive in a low-interest-rate environment. However, its forward P/E ratio and recent earnings revisions suggest the stock is trading at a premium to its near-term fundamentals. Analysts caution that without a material beat in earnings or a significant shift in guidance, AMAT’s valuation could face downward pressure. The Zacks Rank #3 (Hold) rating further underscores this cautious outlook, positioning the stock to mirror broader market trends in the near term.