Stock Analysis | Applied Materials Outlook - Bearish Technicals Weigh on Semiconductor Giant

1. Market Snapshot

Headline Takeaway: Applied Materials (AMAT) is currently in a free fall, down -14.04% recently, with bearish signals dominating over the one bullish indicator, per our internal diagnostic scores.

2. News Highlights

Recent news affecting the broader semiconductor sector includes:

• McKinsey's Tariff Report: New analysis by McKinsey suggests U.S. tariffs will have a lasting impact on chip supply chains, likely affecting global production costs and trade dynamics. This could indirectly pressure Applied Materials, as tariffs may disrupt long-term partnerships.
• Japan-U.S. Cooperation: Japan plans to propose deeper collaboration with the U.S. on rare earths and semiconductors. If successful, this could help reduce reliance on China and support global chip manufacturing, a potential long-term tailwind for AMAT.
• Green Semiconductor Innovation: A report on Cadence highlights the need for sustainable chip manufacturing. As energy efficiency becomes a priority, Applied Materials may face competitive pressure to innovate in eco-friendly production methods.

3. Analyst Views & Fundamentals

Analysts remain divided on AMAT, with 13 institutions weighing in over the past 20 days. The simple average rating is 3.71, while the performance-weighted rating is 3.32. This suggests a generally neutral to bearish outlook, with some high-quality institutions like Morgan Stanley and Mizuho offering more optimism than others.

Rating consistency: There are differences among analysts, with ratings ranging from “Strong Buy” to “Neutral.” The lack of consensus aligns with the stock’s current price trend of -14.04%, showing that expectations are not well-aligned with performance.

Key Fundamental Factors (Internal Model Scores)

• Basic Earnings Per Share (YoY growth): -8.89% (Internal diagnostic score: 3)
• Diluted Earnings Per Share (YoY growth): -8.72% (Internal diagnostic score: 3)
• Net Profit (YoY growth): 3.35% (Internal diagnostic score: 2)
• Interest Coverage Ratio: 34.64% (Internal diagnostic score: 3)
• Cost of Sales Ratio: 51.07% (Internal diagnostic score: 3)
• Cash-UP: 60.95% (Internal diagnostic score: 4)

While some factors like operating cash flow are strong, earnings and profit growth are underperforming, which may explain the bearish sentiment.

4. Money-Flow Trends

Big money is moving cautiously into AMAT, with block trade inflows at 51.24% and an overall inflow ratio of 50.87%, per the internal diagnostic score of 7.31. In contrast, retail and small-cap flows are negative, with extra-large inflows at 53.30%, while small and medium inflows are below 50%. This suggests institutional confidence but weak retail demand.

5. Key Technical Signals

Technically, AMAT is struggling. Our model assigns it a score of 3.28, indicating weak technicals with a recommendation to avoid. Here's how the key indicators are performing:

• RSI Oversold: Internal diagnostic score of 8.13, suggesting a strong bullish signal, although this is isolated.
• WR Oversold: Internal diagnostic score of 2.97, indicating neutral strength.
• Ex-Dividend Date: Internal diagnostic score of 1.00, biased bearish due to negative historical returns.
• Dividend Record Date: Internal diagnostic score of 1.00, also biased bearish.

Recent chart patterns (2025-08-22 through 2025-08-21) show WR Oversold appearing frequently, with occasional RSI Oversold and dividend-related signals. The momentum is weak, and trend quality is low due to the dominance of bearish indicators.

6. Conclusion

While Applied Materials remains a critical player in the semiconductor equipment industry, current signals are bearish. With 3 bearish indicators and only 1 bullish, along with mixed analyst ratings, it may be best to wait for a clearer trend or a potential pullback before entering. Watch for any follow-up on earnings or dividend announcements in the coming weeks for more clarity on its short-term direction.