Stock Analysis | Applied Materials Outlook - A Bearish Technical Picture Despite Mixed Analyst Views

1. Market Snapshot

Applied Materials (AMAT) is currently underperforming, with a price decline of -1.00% in recent trading sessions. While the company’s fundamentals remain mixed and its internal diagnostic score stands at 4.42, technical indicators are sending a bearish signal, with a score of 2.55 and a recommendation to avoid the stock.

2. News Highlights

Recent headlines in the semiconductor industry highlight evolving dynamics:

• McKinsey's Tariff Report – A new McKinsey analysis suggests that ongoing US tariffs could significantly reshape global semiconductor supply chains. This could affect Applied Materials as a supplier to downstream chip manufacturers.
• Japan-U.S. Semiconductor Cooperation – Japan is pushing for deeper cooperation with the U.S. on rare earths and semiconductor production, potentially reducing reliance on China. This could indirectly benefit AMAT if supply chains shift.
• Investor Moves – Funds like Lansforsakringar Fondforvaltning AB have increased investments in semiconductor firms like NXP (NXPI). While this doesn’t directly impact AMAT, it shows growing institutional interest in the sector.

3. Analyst Views & Fundamentals

Analysts are divided in their views, with a simple average rating of 3.71 and a weighted performance-based rating of 2.21, reflecting a bearish tilt when considering historical outcomes. The price trend is currently falling, and the mixed analyst consensus suggests caution.

Key fundamental factor values include:

• Net cash flow from operating activities per share (YoY growth rate): -21.14% – Internal diagnostic score: 1.0
• EV/EBIT: 81.18 – Internal diagnostic score: 3.0
• Gross profit margin (GPM): 49.08% – Internal diagnostic score: 1.0
• Accounts receivable turnover ratio: 2.50 – Internal diagnostic score: 3.0
• Net profit attributable to parent company shareholders / Net profit: 100.00% – Internal diagnostic score: 1.0

The combination of strong net profit attribution and weak operating cash flow shows mixed fundamentals, with some internal diagnostic scores indicating potential red flags.

4. Money-Flow Trends

Big money is moving out, as block trading shows a negative trend with an inflow ratio of 48.36%. Institutional and large-cap flows are also negative across all categories, with the Extra-large inflow ratio at 48.72%. Meanwhile, retail flows are similarly weak, with a Small inflow ratio of 48.52%. This broad-based outflow suggests growing bearish sentiment and a lack of conviction among investors across all sizes.

5. Key Technical Signals

The technical outlook is bleak, with two bearish indicators dominating and no bullish ones. The internal diagnostic technical score is 2.55, and the overall trend suggests avoiding the stock.

• WR Oversold (score: 3.91) – While technically in an oversold condition, this indicator is not a strong buy signal and shows a neutral to bearish bias.
• Bearish Engulfing (score: 1.19) – This pattern is a clear bearish reversal signal, with a historically low win rate of 33.33% and a negative average return of -0.02%.

Over the past five trading days, the Bearish Engulfing pattern appeared on September 3, 2025, while WR Oversold showed up on multiple dates, including August 22, August 26, and September 3. These signals indicate weak momentum and a potential continuation of the current downtrend.

6. Conclusion

Investors should consider avoiding AMAT in the near term. The technical landscape is bearish, with key indicators like Bearish Engulfing and WR Oversold signaling caution. Although some fundamentals remain stable and analyst ratings are mixed, the lack of bullish momentum and consistent outflows across all investor categories paint a challenging outlook. Watch for any positive earnings surprises or major industry developments that could reverse the current negative trajectory.