Stock Analysis | Applied Materials Outlook - Bearish Momentum and Weak Technical Signals

Market Snapshot

Headline takeaway: Applied Materials (AMAT) is in a clear downtrend, with bearish technical signals and weak sentiment from analysts. Investors are advised to proceed cautiously.

Over the past five days, AMAT's stock has fallen by 11.52%, and the technical outlook is particularly negative. Our internal diagnostic score for technical analysis is just 1.74 out of 10, suggesting a weak market state with a high risk of further decline.

News Highlights

• Japan to Offer U.S. Proposals for Cooperation on Rare Earths, Semiconductors: This news could help reduce trade imbalances and diversify supply chains, potentially benefiting semiconductor companies like AMAT. However, the impact on AMAT will depend on its exposure to the U.S.-Japan supply chain and how this cooperation affects global pricing and competition.
• Intel and AMD Executives Launch AI Chip Startups in India: These new ventures, fueled by government incentives, could increase competition in the global semiconductor market. While this may pressure AMAT in the long run, it also signals robust demand for AI hardware, which could support broader market growth.
• Investors Focus on NVIDIA in Semiconductor Industry: With multiple articles assessing NVIDIA's performance against peers, it's clear that NVIDIA is dominating the headlines in the semiconductor space. While this doesn’t directly affect AMAT’s operations, it highlights the broader competitive environment and could draw capital away from smaller or less dominant players.

Analyst Views & Fundamentals

Analyst sentiment for AMAT is highly bearish, with 12 institutions issuing recent ratings. The simple average rating is 3.77 (on a scale from 1 to 5), while the performance-weighted rating is just 1.51, reflecting poor historical returns from analysts' recommendations.

Analysts’ views are not consistent—there are clear differences in ratings and expectations. Despite the mixed guidance, the overall market sentiment is pessimistic, and this aligns with the recent stock price decline. Most analysts have downgraded or maintained neutral-to-negative stances, suggesting a lack of confidence in AMAT’s short-term prospects.

Key Fundamental Metrics

• Net profit attributable to parent company shareholders / Net profit: 100.0% (internal diagnostic score: 2.4)
• EV/EBIT: 45.75 (internal diagnostic score: 3.1)
• Basic earnings per share (YoY growth rate): -8.89% (internal diagnostic score: 1.2)
• Net cash flow from operating activities per share (YoY growth rate): 35.22% (internal diagnostic score: 2.4)
• Cash-UP: 0.61 (internal diagnostic score: 3.1)

While the firm still generates positive cash flow, the drop in earnings and weak operating performance signals challenges. The fundamental diagnostic score of 5.55 out of 10 suggests moderate health, but it’s not strong enough to counter the bearish technical and sentiment signals.

Money-Flow Trends

Recent money-flow patterns for AMAT are largely bearish. Across all sizes of funds, the inflow ratios are below 50%, with the smallest investor group showing a 48.9% inflow ratio and the extra-large group slightly higher at 50.2%.

The fund-flow score is 7.64 out of 10, which is classified as "good," but this may reflect a correction rather than a sign of strength. Large institutional blocks are also showing negative trends, with a block inflow ratio of 49.9%, reinforcing the bearish momentum.

Key Technical Signals

Technically, AMAT is in a deeply bearish state. Out of five recent indicators, 5 are bearish and 0 are bullish. Here are the key signals:

• Bearish Engulfing: Internal diagnostic score: 1.19 — A classic bearish candlestick pattern indicating a potential reversal from a downtrend.
• MACD Golden Cross: Internal diagnostic score: 1.00 — Typically a bullish sign, but here it's bearish due to context and weak volume support.
• Earnings Release Date: Internal diagnostic score: 1.00 — Earnings events can trigger volatility, and in this case, the outcome was negative.

Recent Chart Patterns by Date

• 2025-08-14: Bearish Engulfing, MACD Golden Cross, and Earnings Release Date all triggered on the same day — a strong bearish confluence.
• 2025-07-29: Bearish Engulfing again appeared, reinforcing the bearish trend.
• 2025-08-12 to 2025-08-13: WR Overbought signals suggest the market may be correcting after a recent rally, but these are now neutral to bearish.

The overall technical trend is weak, and the market is advised to avoid AMAT at this time due to the dominance of bearish indicators and poor momentum.

Conclusion

Investors should avoid Applied Materials at this stage due to the combination of bearish technical patterns, weak analyst sentiment, and poor price action. The internal technical score of 1.74 out of 10 is a strong bearish signal, and the recent price drop of 11.52% has not shown signs of reversal. While the fundamentals are not catastrophic, they lack the strength to support a turnaround. Consider waiting for a clearer bottom or a significant earnings surprise before re-entering the position.