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Applied Materials Shares Tumble 5% Amid Semiconductor Sector Slump and Analyst Downgrade

Mover TrackerThursday, Dec 5, 2024 5:31 pm ET

1min read

On December 5th, shares of Applied Materials (AMAT) fell 5.04%, marking a three-day losing streak with a total decline of 6.13%. The downturn coincides with a broader pullback in the semiconductor sector, which saw a modest dip of 0.77% overall.

Recent financial reports reveal that Applied Materials recorded a revenue of $27.176 billion and a net profit of $7.177 billion, with earnings per share of $8.68. Despite this solid performance, the current market conditions appear to be influencing investor sentiment. Additionally, in terms of ratings, 68% of analysts recommend buying AMAT shares, while 30% advise holding, and a small 2% suggest selling.

Applied Materials reigns as one of the largest manufacturers of semiconductor wafer fabrication equipment globally. With a comprehensive product portfolio, the company dominates the deposition market segment—an essential process in semiconductor wafer production. Its clientele includes major global chip manufacturers like TSMC, Intel, and Samsung, reflecting its critical role in the semiconductor supply chain.

Key recent developments for Applied Materials include a notable analyst downgrade. Concerns are rising over a potentially transitional year in 2025 for the wafer fabrication equipment market. While there has been significant momentum led by DRAM advancements and robust activity in China throughout 2024, forecasts suggest a potential decline in overall equipment spending by around 6% in 2025. As such, Applied Materials faces an evolving market landscape with varying spend trends across different memory types.

Notably, dynamic random-access memory (DRAM) expenditures are predicted to fall by 10%, while NAND flash expenses might see a 22% uptick. Geographically diverse spending trends, including a 15% decrease from Chinese sources, further complicate the outlook for wafer equipment, affecting companies such as Applied Materials, whose prospects are intertwined with these market dynamics.

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