Applied Materials Inc

KLA is benefiting from accelerating demand for advanced packaging driven by AI and high-performance computing, with the company expecting its advanced packaging process-control systems revenues to reach approximately $1.1 billion in calendar 2026, representing growth of more than 70% year over year. The company's broad portfolio, including wafer inspection and metrology systems and chemistry process-control systems, positions it to capture spending across multiple stages of advanced packaging, while HPC packaging and integration are also driving demand in its Specialty Process and PCB and Component Inspection businesses, with these combined products expected to grow more than 25% in calendar 2026. However, KLA faces tough competition from Onto Innovation and Applied Materials, with Onto raising its 2026 advanced packaging growth outlook to approximately 80% and securing more than $200 million of Dragonfly orders from a single OSAT, and Applied Materials expecting its process diagnostics and control business to grow more than 50% in 2026. KLA shares have jumped 50.9% year to date, outperforming the broader Zacks Computer and Technology sector's return of 15.4%, but the stock is overvalued with a forward 12-month price/sales of 13.05X compared with the sector's 6.32X. The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $5.43 per share, up 7.1% over the past 30 days, suggesting 44.41% growth from fiscal 2026, and KLA currently carries a Zacks Rank #2 (Buy).

Reports that Shanghai Aishengna Electronic Technology Group has begun producing immersion DUV systems sent shares of ASML Holding (ASML) down sharply, but the immediate threat to Applied Materials (AMAT) is overstated. Applied Materials does not make lithography systems; a Chinese immersion DUV machine competes directly with ASML, not with Applied Materials' deposition, etch, and other systems. However, China's directive requiring semiconductor manufacturers to use at least 50% domestically produced equipment when adding new capacity pressures Applied Materials' $4.2 billion annual China revenue. In fiscal Q1 2026, China accounted for $2.095 billion, or 29.9% of total revenue, and in Q2, $2.087 billion, or 26.4%. Six major Chinese equipment suppliers saw combined sales surge from $748 million in 2020 to $7.608 billion in 2025, and CXMT, a key DRAM maker, sources an estimated 40% to 50% of its tools domestically, potentially overtaking Micron in physical wafer capacity by 2030. While five initial DUV systems are too few to impact 2026 earnings, the longer-term risk is that China's domestic equipment ecosystem reduces Applied Materials' addressable market over several years.

Hedge funds and mutual funds took sharply different approaches to individual AI stocks during the second quarter, according to Goldman Sachs. Hedge funds bought Microsoft and Amazon while mutual funds reduced positions in both, and hedge funds cut exposure to Alphabet, Meta Platforms, Nvidia, Broadcom, Lam Research, Marvell Technology, Cisco Systems, Hewlett Packard Enterprise and Applied Materials. Mutual funds bought Advanced Micro Devices, Micron Technology and Sandisk while hedge funds reduced exposure to those stocks. Goldman identified 12 AI infrastructure stocks purchased by both groups, including American Electric Power, Bloom Energy, CoreWeave, Flex, NiSource, Seagate Technology, Talen Energy and Xcel Energy. The analysis covers 991 hedge funds with $5.4 trillion of gross equity positions and 504 large-cap active mutual funds with $4.6 trillion in equity assets.

Applied Materials reported fiscal third-quarter results that beat Wall Street estimates on revenue and adjusted profit, yet its shares fell nearly 5% in after-hours trading and kept sliding into August 14, 2026, while rival Lam Research saw its stock rise 6% after its own stronger-than-expected results on July 29, 2026. Applied Materials posted adjusted earnings of $3.50 a share versus the $3.40 expected and revenue up 25% year over year to $9.12 billion, topping the roughly $9 billion forecast, and guided fourth-quarter revenue to about $10.25 billion, above the $9.55 billion analysts expected. Investors punished the stock because they wanted clearer proof the company is outpacing rivals rather than falling behind them, with Summit Insights Group noting Applied's topline has lagged peers including ASML and Lam Research, and Morgan Stanley calling the quarter good but not great. Lam Research forecast first-quarter revenue of $8.10 billion, well above the $7.09 billion expected, and adjusted earnings of $2.15 a share versus the $1.83 Wall Street expected, and its prior quarter also beat with revenue of $6.72 billion and adjusted earnings of $1.82 a share. Applied Materials trades at 32.14 times forward earnings, a discount to Lam's 34.59 times, KLA's 36.85 times, and ASML's 33.39 times, and a $220 million unrealized investment loss dragged GAAP earnings per share below estimates even as the adjusted figure beat.

Applied Materials reported record fiscal third-quarter results, with revenue up 25% year over year to $9.1 billion and non-GAAP earnings per share up 41% to a record $3.50. The company guided fiscal fourth-quarter revenue to $10.25 billion, plus or minus $500 million, implying 51% year-over-year growth at the midpoint, and non-GAAP earnings per share of $4.02, up 85%. Despite the record results and strong guidance, shares fell about 5% in after-hours trading, leaving the stock more than 25% below its 52-week high of $739.67. Management attributed the growth to the artificial intelligence build-out, with leading-edge chipmaking, DRAM, and advanced packaging expected to represent about 80% of wafer fab equipment market growth in 2026 and 2027. The company also said it expects China revenue to increase this calendar year and plans to distribute 80% to 100% of free cash flow, with $12.8 billion remaining on its buyback authorization.

Bank of America lowered its price target on Applied Materials to $650 from $720 while keeping a Buy rating, citing slower sequential growth and a flatter margin outlook. The move follows a record fiscal third quarter in which revenue rose 25% year over year to $9.12 billion and non-GAAP EPS jumped 41% to $3.50. BofA noted Applied's quarterly guidance implies roughly 13% sequential growth versus about 20% for Lam Research, and it compressed its valuation multiple to 27 times estimated 2028 earnings from 36 times previously. The bank simultaneously raised its EPS estimates for 2026, 2027 and 2028 by 8%, 15% and 22%, respectively, while highlighting roughly 50% year-over-year DRAM growth and more than 70% advanced-packaging growth tied to AI infrastructure demand.

Robinhood Markets CIO Stephanie Guild says the artificial intelligence boom may keep driving stocks to fresh records, but its enormous appetite for capital is creating a new threat to the rally: a 10-year Treasury yield above 5%. Speaking to Bloomberg on Friday, Guild said the largest technology companies are funding an expansion of intelligence that is accelerating the market while competing with Washington for increasingly expensive capital. She argued that investors still aren't fully buying into the AI spending boom, noting earnings growth expectations for 2026 have doubled while the S&P 500's valuation multiple has fallen and expectations for 2027 have barely moved. Guild pointed to Applied Materials as an example, saying the chip-equipment maker was set to open lower Friday despite beating Wall Street estimates as investors continued to question whether enormous AI capital spending will generate sufficient returns. She said that skepticism allows the market to continue to rip, but warned that competition for capital is one reason Treasury yields are rising, with Thursday's 30-year auction clearing at the highest yield since 2001 despite solid demand. Guild said one of the big risks is that you could see the 10-year going beyond 5%, which may keep valuations lower and slow how quickly the AI buildout can happen. She compared the recent Situational Awareness blowup to Long-Term Capital Management in 1998, describing that episode as a market-clearing washout rather than an omen of worse to come, and noted stocks climbed another 35% after LTCM before the dot-com bust arrived. Guild expects the modern cycle to move much faster, with parabolic moves and speed crashes, and said everyday investors may need to get more used to higher volatility.

Stock futures were largely unchanged early Friday as investors weighed cooling inflation data and a fresh batch of tech earnings. Reddit shares jumped 12% after S&P Dow Jones Indices said the company will replace AvalonBay Communities in the S&P 500 before trading opens on August 18. Nu Holdings gained 9% after the Brazilian digital bank reported stronger-than-expected second-quarter results, with revenue up 56% year-over-year to $5.88 billion and GAAP EPS of $0.22. Globant plunged 13% after posting adjusted EPS below expectations and signaling continued pressure on revenue growth, while Applied Materials slipped 5% despite beating fiscal third-quarter estimates as investors sought a stronger upside surprise after the stock's nearly 98% year-to-date gain.

Applied Materials, a major U.S. semiconductor equipment maker, on Thursday issued a revenue outlook for the fiscal fourth quarter ending in October that exceeded market expectations. The company expects semiconductor manufacturers to keep expanding equipment investment amid robust demand for advanced chips used in artificial intelligence. Its latest fourth-quarter revenue forecast is about 10.25 billion dollars, plus or minus 500 million dollars, while the average analyst estimate compiled by LSEG was 9.54 billion dollars. Revenue for the fiscal third quarter ended in July came to 9.12 billion dollars, beating the market forecast of 8.99 billion dollars. Still, the stock fell about 4 percent at one point in after-hours trading following the earnings release. Expectations had been running high, with the shares already more than doubling this year, and the results are seen as falling short of some bullish targets. The company also raised its calendar 2026 revenue growth outlook for advanced packaging-related business to more than 70 percent from its previous forecast of more than 50 percent.

Michael Burry warned that the S&P 500's record high could precede a 1987-style crash, while maintaining short positions in Nvidia, the iShares Semiconductor ETF, Micron, Caterpillar, Palantir, Tesla, and Applied Materials. In a Tuesday Substack post, he said the market may be near a major top and that new highs could draw in fresh money, fueling a self-reinforcing rally driven by volatility-targeting and momentum strategies. He noted the S&P 500 has surged 5% over four trading days to a new high only three other times, citing BTIG analysis. All his short positions remain profitable except Nvidia, though he would close any trade that moves decisively against him. Burry has long been skeptical of the AI investment cycle, and earlier this year he added to his Nvidia short via January 2027 puts with a $115 strike price at $3.30 per contract, while calling Palantir wildly overvalued.

Samsung Electronics and SK Hynix are evaluating chipmaking equipment from China's Advanced Micro-Fabrication Equipment (AMEC) for possible use at their Chinese factories, three people familiar with the matter said, as the South Korean firms hedge against the risk of tighter U.S. export controls. The memory chipmakers began testing AMEC etching equipment about two years ago, when uncertainty was mounting over whether Washington would continue allowing them to import U.S. chipmaking tools into China. Washington revoked the VEU authorization in 2025 and later granted an annual license to the chipmakers to bring in chip manufacturing equipment to their facilities in China for 2026. Even so, both companies remain wary that future restrictions could extend beyond new equipment to the servicing, repair or replacement of Western tools already installed at their Chinese plants, the sources said. For AMEC, winning approval from Samsung or SK Hynix would amount to a powerful commercial endorsement, though any breakthrough would still face hurdles including lengthy qualification processes and potential political pressure from Washington.

The current artificial intelligence infrastructure build-out has surpassed the peak of the late-1990s internet boom as a share of the total US economy, according to Zacks Chief Equity Strategist and Economist John Blank. Blank notes that tech has been responsible for the majority of US GDP growth for an extended period, driven by massive AI capital expenditures projected to reach significant levels by 2026. He warns that two S&P 500 sectors appear overvalued, with tech being one of them, and sees potential for a near-term valuation correction. For investors, Blank highlights three large-cap stocks: Applied Materials, Cisco Systems, and Alphabet, ranking them from most overvalued to most reasonably valued.

U.S. stocks fell sharply, with the S&P 500 sliding to a one-month low and the Nasdaq 100 sinking to a three-month low, as chipmakers and AI infrastructure stocks sold off and crude oil prices surged more than 7%. The Philadelphia Semiconductor Index dropped over 3% to a two-and-a-half-month low, with Nebius Group down more than 9%, KLA Corp and Sandisk down more than 7%, and Applied Materials, NXP Semiconductors, and ARM Holdings down more than 5%. Crude oil jumped after the Islamic Revolutionary Guard Corps said it targeted a U.S. airbase in Jordan with ballistic missiles and claimed to have halted three tankers in the Strait of Hormuz, while the U.S. and Saudi Arabia launched a joint attack on Iran-aligned terrorists in Iraq. The Federal Reserve kept interest rates unchanged in a 9-3 decision, and markets awaited earnings from Microsoft and Meta Platforms after the close. The 10-year Treasury yield rose 4 basis points to 4.64%, and energy stocks gained, with Diamondback Energy up more than 4% and ConocoPhillips, APA Corp, Devon Energy, ExxonMobil, and Occidental Petroleum up more than 3%.

Semiconductor stocks fell sharply amid a global sell-off driven by concerns over increased competition from China and doubts about the sustainability of AI-related demand. Amkor led the decline, falling nearly 24% after its third-quarter revenue guidance missed analyst expectations, while Vishay Intertechnology, FormFactor, Penguin Solutions, and Micron dropped roughly 9% to 11%. Kulicke and Soffa fell 7.8%, Applied Materials fell 7.1%, AMD fell 7.2%, Intel fell 5.3%, and KLA Corporation fell 5.1%. The rout extended to Asian peers SK Hynix and Samsung, which dropped over 13%, as reports of China's progress in advanced chip manufacturing and the strong debut of Chinese competitor ChangXin Memory Technologies fueled fears of oversupply and pricing pressure.

U.S. chip stocks extended losses in premarket trading Tuesday, building on Monday's declines after a broad selloff swept through Asian semiconductor names overnight. Memory chip stocks Micron, SanDisk, and Western Digital fell about 4% each, while Intel shed 3.2%, Marvell Technology and Applied Materials lost about 2.8% each, AMD dipped more than 3%, and Super Micro Computer slipped 2.9%. The rout began Monday when Nvidia shares fell 5% in New York, stripping the AI chip giant of its title as the world's most valuable listed company after The Wall Street Journal reported the company is in talks to provide around $250 billion toward a massive data-center project tied to OpenAI. The weakness carried into Asian trading Tuesday, with South Korea's Kospi tumbling roughly 11% and triggering its eighth circuit breaker of the year, while Japan's Nikkei 225 fell 4% and memory-chip maker Kioxia sank 18%. Analysts attributed the pullback to worries over how AI infrastructure is being financed, China's advancing chip capabilities, and intensifying competition from Chinese semiconductor firms, highlighted by Chinese memory chipmaker CXMT surging 466% on its Shanghai debut on July 27 in Asia's largest IPO of 2026, raising $8.6 billion and pushing its market value to 3.3 trillion yuan, or about $487.73 billion, nearly half the valuation of U.S. rival Micron.

China has begun mass-producing domestic immersion DUV lithography machines, raising concerns that local alternatives could erode demand for Western chip equipment suppliers such as Applied Materials amid ongoing export controls. This development introduces a new competitive and geopolitical risk for Applied Materials, potentially complicating its ability to convert AI-driven semiconductor investment into future equipment orders from Chinese fabs. Applied Materials' investment narrative projects $50.6 billion revenue and $16.6 billion earnings by 2029, requiring 20.4% yearly revenue growth and roughly an $8.1 billion earnings increase from $8.5 billion today. The company recently introduced new systems for 2 nm and advanced 3D architectures, including the Viva nanosheet engineering platform and advanced ALD and etch tools, which could help offset pressure if Chinese fabs increasingly use local lithography. Some of the most optimistic analysts were expecting revenue to reach about $67.2 billion and earnings $24.4 billion by 2029, far more upbeat than the risk of Asian rivals gaining share in restricted markets that this China DUV news highlights.

Semiconductor capital equipment stocks sank on Monday after a report that a Shanghai-based, state-backed company has started mass-producing homegrown immersion DUV lithography machines for the first time. ASML erased early gains of over 2% and dragged down U.S. peers Applied Materials, Lam Research, and KLA Corp following the report by The Information. The publication noted that the company assembled DUV development teams from other Chinese firms, including state-backed startup Shanghai Yuliangsheng Technology, to achieve the milestone. The breakthrough threatens ASML’s DUV sales to China, which had become a massive revenue driver after export controls banned sales of its cutting-edge EUV machines, and raises fears that a fully indigenized Chinese chip sector could displace other U.S. equipment suppliers. The development also undermines the impending U.S. MATCH Act, which aims to block China from buying or servicing DUV machines, as domestic production could render the restrictions ineffective.