Applied Materials Plummets 3.2%: What's Fueling the Selloff?

Summary
• AMAT trades at $159.94, down 3.22% intraday amid sector-wide weakness
• Daiwa downgrades price target to $200 from $220, citing earnings concerns
• Lam Research (LRCX) drops 4.51%, amplifying industry jitters
• Technical indicators signal bearish momentum with RSI at 28.95 and MACD -5.90

Applied Materials faces a sharp intraday selloff, driven by a combination of earnings underperformance, analyst skepticism, and broader semiconductor sector headwinds. The stock’s decline to $159.94—a 3.22% drop from its previous close—reflects investor anxiety over Daiwa’s bearish revision and rising bond yields. With Lam Research leading the sector’s retreat and key technical indicators flashing red, the path forward for AMAT remains fraught with uncertainty.

Earnings Miss and Analyst Downgrade Trigger Sharp Selloff
Applied Materials’ intraday collapse stems from a combination of earnings disappointment and analyst skepticism. The company reported $7.30 billion in revenue but missed earnings per share expectations, prompting Daiwa Securities to downgrade its price target from $220 to $200. This move, coupled with rising bond yields and global supply chain concerns highlighted in McKinsey’s analysis, has eroded investor confidence. The stock’s 3.22% drop reflects a market recalibration of expectations amid mixed signals from both corporate performance and macroeconomic trends.

Semiconductor Equipment Sector Sinks as Lam Research Leads Decline
The semiconductor equipment sector is under pressure, with Lam Research (LRCX) plummeting 4.51%—a steeper decline than AMAT’s 3.22%. This divergence suggests sector-wide weakness but highlights AMAT’s relative resilience. While both stocks face headwinds from global trade tensions and inventory adjustments, Lam Research’s sharper drop underscores its vulnerability to near-term demand shifts. Investors should monitor whether AMAT’s fundamentals can outperform its peers as the sector navigates macroeconomic volatility.

Bearish Options and Key Levels: Navigating AMAT’s Volatility
• RSI: 28.95 (oversold)
• MACD: -5.90 (bearish), Signal Line: -5.04
• 200D MA: $169.07 (above current price)
• Bollinger Bands: Lower bound at $150.69 (critical support)

Technical indicators suggest AMAT is in a bearish consolidation phase. The stock is trading below its 200-day moving average and near the lower Bollinger Band, signaling potential for further downside. Key levels to watch include the intraday low of $159.43 and the 200D MA at $169.07. While the RSI hints at oversold conditions, the MACD histogram’s negative divergence suggests momentum remains bearish. No leveraged ETF data is available to gauge broader sector sentiment.

Top Options Picks:
• AMAT20250905P150 (Put):
- Strike: $150, Expiry: 2025-09-05
- IV: 32.03% (moderate), LVR: 731.27% (high)
- Delta: -0.0649 (moderate), Theta: -0.0179 (time decay), Gamma: 0.0166 (sensitivity)
- Turnover: $5,096 (liquid)
- Why: High leverage and moderate delta position this put for gains if AMAT breaks below $159.43. A 5% downside scenario (to $152.82) would yield a $2.82 payoff.
• AMAT20250905P152.5 (Put):
- Strike: $152.5, Expiry: 2025-09-05
- IV: 29.67% (moderate), LVR: 446.89% (high)
- Delta: -0.1046 (moderate), Theta: -0.0116 (time decay), Gamma: 0.0257 (sensitivity)
- Turnover: $12,014 (liquid)
- Why: Strong liquidity and high gamma make this contract ideal for a sharp selloff. A 5% downside scenario (to $152.82) would yield a $0.32 payoff.

Hook: Aggressive bears should target AMAT20250905P150 if the $159.43 support breaks, while AMAT20250905P152.5 offers a safer play on a $152.50 pivot.

Backtest Applied Materials Stock Performance
I have completed the back-test you requested and prepared an interactive report you can review directly in the chat. Open the module below to inspect the strategy’s basic information, detailed conditions, and key performance metrics (return, draw-down, Sharpe, etc.).Key assumptions (auto-filled for you):• Test window: Jan-2010 – 29 Aug 2025 (covers enough market cycles). • Entry price: same-day close once the intraday plunge is detected. • Exit rule: flat after 5 trading days, no additional stop-loss / take-profit. Feel free to explore the results and let me know if you’d like to tweak any parameters (different holding period, add stop-loss, narrow the date range, etc.).

Watch for $159.43 Breakdown or Sector Rebound
Applied Materials’ near-term trajectory hinges on its ability to reclaim the $169.07 200-day moving average or break decisively below the $159.43 intraday low. While the RSI suggests oversold conditions, the MACD’s bearish divergence and sector weakness at Lam Research (-4.51%) indicate caution. Investors should prioritize short-term options like AMAT20250905P150 for bearish exposure but remain alert to a potential rebound above $163.66. Action: Monitor the $159.43 support level and Lam Research’s performance—break below either could signal a deeper selloff.