Applied Materials Outlook - Mixed Signals Amid Volatile Market Conditions

Market Snapshot

Applied Materials (AMAT.O) is under technical pressure with a weak score, but strong fundamentals are helping it weather the storm. The recent price rose by 4.38%, but technical indicators suggest caution.

News Highlights

• McKinsey Report on Tariffs and Chip Supply Chains: New research from McKinsey & Co explores the impact of U.S. tariffs on the semiconductor sector, which may affect Applied Materials if trade policies shift.
• Japan-U.S. Cooperation on Rare Earths and Semiconductors: Japan proposes stronger cooperation with the U.S. in rare earth materials and semiconductor manufacturing, potentially helping companies like AMAT by reducing dependency on China.
• SOXX ETF Sees $750M Net Outflow in May: The U.S. Semiconductors ETF (SOXX) saw significant outflows, which could indirectly impact investor sentiment for stocks like AMAT in the sector.

Analyst Views & Fundamentals

Despite recent price strength, the fundamental outlook is mixed. The simple average rating is 3.00, while the performance-weighted rating is 1.95, indicating a gap between current expectations and past performance. Analyst ratings are not consistent, with a recent "Neutral" rating from Mizuho, which has a historical win rate of just 33.3%.

• Net cash flow from operating activities per share (YoY growth rate): -93.11% (internal diagnostic score: 1.00). Strongly negative growth highlights cash flow challenges.
• Net profit attributable to parent company shareholders / Net profit: 100.00% (internal diagnostic score: 1.00). Indicates that the parent company is receiving all of the net profit—ideal, but context matters.
• EV/EBIT: 81.18 (internal diagnostic score: 3.00). A high ratio suggests valuation concerns.
• Total profit (YoY growth rate): 3.35% (internal diagnostic score: 2.00). Weak growth in total profit.
• Net cash flow from operating activities (YoY growth rate): -32.85% (internal diagnostic score: 2.00). Operating cash flow is deteriorating.
• CFOA (Cash flow from operations): 4.67% (internal diagnostic score: 3.00). A positive but modest cash flow from operations.
• GPOA (Gross profit from operations): 10.36% (internal diagnostic score: 3.00). Indicates moderate gross profitability.
• Interest coverage ratio (EBIT / Interest expense): 34.64% (internal diagnostic score: 3.00). Strong ability to cover interest expenses.
• Total assets turnover ratio: 41.93% (internal diagnostic score: 4.00). Moderate asset efficiency.
• Cost of sales ratio: 51.07% (internal diagnostic score: 1.00). High cost of sales is a red flag.

Fundamentals suggest a firm business with some underlying pressures—especially in cash flow and cost efficiency. The price rise doesn’t align with the bearish technical signals, suggesting a potential divergence that investors should monitor.

Money-Flow Trends

Big-money flows remain negative across all sizes, with the overall inflow ratio at 48.25%, indicating a net outflow from large institutional to retail levels. This is a warning sign, especially for a stock with mixed fundamentals and weak technicals. Retail investors are also cautious, with small investor inflows sitting at just 48.76%, suggesting no strong retail support to counter the outflows.

Key Technical Signals

Technically, the stock is under pressure. The internal diagnostic score is 3.72, with bearish signals outweighing bullish ones (5 vs 2). Key indicators:

• WR Overbought (neutral strength, score: 2.15) – Suggests overbought conditions but weak momentum.
• Marubozu White (bearish, score: 1.00) – A long white candle indicating a weak bullish attempt.
• MACD Golden Cross (bearish, score: 1.00) – Often bullish, but recent signals have failed, with poor win rates.
• Bullish Engulfing (strong bullish, score: 8.10) – A strong reversal pattern that may be temporary.
• Dividend Payable Date (bullish, score: 7.81) – Usually a positive catalyst for investor activity.

Recent chart patterns highlight volatility. On 2025-09-12, WR Overbought was the only signal, while on 2025-09-11, three signals appeared: WR Overbought, Marubozu White, and the Dividend Payable Date. These signals indicate a mixed and uncertain trend, with no clear direction—perfect for a cautious stance.

Conclusion

Investors should consider waiting for a pull-back or clearer signs of momentum. While the fundamentals remain solid, the technicals are weak and money flow is negative. With mixed analyst ratings and a low consensus score, now may not be the best time to chase the recent price rise. Watch for earnings or any news on U.S.-Japan semiconductor partnerships, which could provide a directional catalyst in a currently volatile market.