Applied Materials Plunges 14.23% on Weak China Demand, Tariff Concerns

On August 15, 2025, Applied Materials' stock experienced a significant drop of 14.23% in pre-market trading, reflecting investor concerns over the company's recent financial outlook and market conditions.

Applied Materials reported a strong third-quarter performance, with revenue rising 8% year-over-year to $7.30 billion, surpassing analyst estimates. However, the company's fourth-quarter forecast fell short of expectations, citing weak demand in China and uncertainty due to tariffs and export restrictions. This led to a nearly 14% decline in premarket trading on Friday.

The company's CFO, Brice Hill, attributed the expected revenue decline in the fourth quarter to the digestion of capacity in China and non-linear demand from leading-edge customers. Tightened export controls on advanced semiconductor manufacturing equipment to China have also impacted the company's ability to sell its most cutting-edge tools to Chinese customers.

In China, chipmakers are pausing new equipment orders to absorb recently added capacity for older-generation, mainstream chips. This market, which accounted for 35% of Applied Materials' total sales in the July quarter, has shown increased volatility, according to senior analyst Brooks Idlet at CFRA Research.

The company's fourth-quarter revenue forecast of $6.70 billion, plus or minus $500 million, is below analysts' average estimate of $7.33 billion. The projected adjusted profit per share of $2.11, plus or minus $0.20, is also lower than the estimated $2.39. The company's third-quarter adjusted profit per share of $2.48 exceeded estimates of $2.36.