Applied Materials' Weak Outlook Sends Stock Plummeting Amidst Mixed US Futures

Applied Materials issued a weak Q4 outlook, leading its shares to dip 14.7% in pre-market trading. The chip equipment manufacturer reported Q3 revenue of $7.3 billion, beating estimates, but Q4 guidance fell short of expectations. Other stocks moving lower in pre-market trading include Globant, Sandisk, and KLA Corporation.

Applied Materials, Inc. (NASDAQ: AMAT), a leading provider of semiconductor manufacturing equipment, reported its Q3 2025 earnings on July 2, 2025, with a significant revenue beat but a weak Q4 outlook that led to a 14.7% drop in its pre-market share price. The company's Q3 revenue of $7.3 billion exceeded analyst expectations by 8% year-over-year, driven primarily by robust demand for AI chip manufacturing technologies, such as gate-all-around (GAA) transistors, advanced DRAM, and high-bandwidth memory (HBM) [1].

The company's non-GAAP gross margin of 48.9% and operating margin of 30.7% underscored its cost management and favorable product mix. Free cash flow surged to $2 billion, with $2.6 billion in cash from operations, enabling aggressive shareholder returns of $1.4 billion in dividends and buybacks. These metrics highlight Applied Materials' ability to balance short-term profitability with long-term innovation [1].

However, the company issued cautious guidance for Q4 2025, forecasting revenue of $6.7 billion, a sequential decline of 8%. This was attributed to capacity digestion in China and uneven demand from leading-edge customers. China's contribution to revenue is expected to drop from 35% to 29%, reflecting macroeconomic uncertainty and export control delays [1].

Despite near-term challenges, Applied Materials' strategic positioning in GAA, advanced packaging, and hybrid bonding ensures it will remain a key beneficiary of the AI manufacturing cycle. The company's global R&D and manufacturing footprint, coupled with its scalable innovation pipeline, positions it to navigate near-term volatility and maintain long-term growth [1].

Other stocks moving lower in pre-market trading include Globant, Sandisk, and KLA Corporation. Analysts project AMAT's revenue to grow at a 5.27% CAGR through 2028, with EPS expanding at 7.84%, driven by its AI-driven growth story [1].

References:
[1] https://www.ainvest.com/news/applied-materials-pioneering-ai-semiconductor-revolution-scalable-innovation-2508/