Applied Materials Plummets Amid Sector-Wide Caution—What’s Driving the Sell-Off?

• AMAT shares drop 2.39% to $194.52, trading between $189.75 and $194.73 intraday.
• Sector leader ASML’s -7.78% plunge sparks broader semiconductor equipment sell-off.
• RSI hits 92.63—overbought territory—while Bollinger Bands signal volatility expansion.
• Amid AI-driven demand, Applied’s tools remain in high demand, but macro fears dominate.

Applied Materials’ stock faces a critical crossroads as the semiconductor sector reels from ASML’s cautionary outlook. The sell-off, fueled by geopolitical trade risks and slowing capital spending signals, tests Applied’s valuation despite its AI-chip tool dominance.

ASML’s Growth Uncertainty Triggers Semiconductor Sell-Off
Applied Materials’ 2.39% decline mirrors broader sector turmoil after ASML Holding (ASML) warned it can no longer guarantee 2026 growth due to macroeconomic and geopolitical uncertainties. ASML’s machines are critical for advanced chip manufacturing, and its caution signals potential capital expenditure cuts across the industry. While Applied’s Sym3 Magnum etch system and AI-driven tool sales remain strong—generating $1.2B in revenue—the sector-wide sell-off overwhelmed positive fundamentals. Analysts note the selloff reflects investor anxiety over U.S.-China trade tensions and tariffs impacting semiconductor supply chains.

Semiconductor Sector Under Pressure as ASML Signals Caution
Applied Materials’ 2.39% drop aligns with sector leader ASML’s 7.78% plunge, underscoring the interconnected risks facing semiconductor equipment firms. While Applied’s advanced patterning tools and DRAM revenue growth (projected +40% in FY2025) provide tailwinds, the sector’s reliance on chipmakers’ capital spending makes it vulnerable to macro headwinds. Competitors like Lam Research (LRCX) and KLA (KLAC) also faced pressure, with investors pricing in potential delays to AI chip infrastructure spending.

Short-Term Volatility Opportunities: Focus on Puts and Sector ETFs
Technical Indicators:
• 200-day MA: $171.33 (well below current price)
• RSI: 92.63 (extreme overbought, signaling potential correction)
• Bollinger Bands: Upper $205.09, Lower $166.54 (price near upper band)
• MACD: 8.12 vs Signal Line 7.36 (bullish divergence)

Aggressive traders should focus on short-term options to capitalize on volatility. Two standout picks:

AMAT20250725P185: A put option with a strike price of $185, expiring July 25. Key stats: IV 33.31%, Delta -0.16 (moderate downside exposure), Gamma 0.0226 (sensitive to price swings), Theta -0.0125 (time decay), Turnover 43,224 (high liquidity). This contract offers 209.59% leverage in a 5% downside scenario (to $185) and benefits from sector volatility.

AMAT20250725C192.5: A call option at $192.5 strike, expiring July 25. Stats: IV 27.71%, Delta 0.62 (balanced risk/reward), Gamma 0.0424 (strong price sensitivity), Theta -0.5917 (time decay), Turnover 364,766 (extremely liquid). This contract’s 38.98% leverage rewards a rebound toward its 30-day resistance ($183.32).

Bearish traders should watch the $182.50 support level—failure here could trigger a drop toward the 200-day MA. Aggressive shorts may pair puts with a short position in the VanEck Semiconductor ETF (SMH), which fell 2.1% today.

Backtest Applied Materials Stock Performance
After an intraday plunge of -2% for AMAT, the stock has historically shown a positive short-to-medium-term performance. The 3-day win rate is 54.23%, the 10-day win rate is 55.39%, and the 30-day win rate is 53.73%. While the returns over these periods are modest, with a maximum return of 0.38% over 30 days, the stock tends to recover and even exceed its pre-plunge levels.

Hold or Sell? Applied Materials Faces Crossroads Amid Sector Uncertainty
Applied Materials’ near-term outlook hinges on whether the sector-wide selloff is a buying opportunity or a warning sign. While its AI-driven tool pipeline and 49.2% gross margin remain strengths, the stock’s proximity to overbought RSI levels and ASML’s caution suggest caution. Investors should prioritize downside protection: the $182.50 support is critical, with ASML’s price action and U.S.-China tariff developments as key catalysts. For now, traders may consider the AMAT20250725P185 put to hedge volatility, while bulls await confirmation of sector stabilization above $190. The verdict? This isn’t a stock to chase—wait for a pullback to the 200-day MA before considering accumulation.