Applied Materials (NASDAQ:AMAT) provided fourth quarter fiscal 2025 guidance that demonstrated a year-over-year revenue decline of 4.9% and an adjusted earnings per share drop of 9% during its latest financial results on Thursday.
As a result, shares had plunged more than 10% by Friday morning. The company also received multiple downgrades by financial firms.
Bank of America downgraded the stock to Neutral from Buy and reduced its price target to $180 from $190.
“While AMAT is a high quality supplier, the company’s higher exposure to (over-supplied) mature node (aka ICAPS, esp. in China) and certain leading-edge customers (INTC) is impacting them more this part of the cycle,” said BofA analyst Vivek Arya in an investor note. “Per AMAT the uncertainty could persist, making it tougher for the stock to outperform despite reasonable valuation. We suspect the slowdown is more company specific, and we don’t see the same read-across to our top pick LRCX or to KLAC.”
Summit Insights Group also downgraded the stock to Hold from Buy.
“We believe U.S. government export restrictions to China have likely driven pull-ins from Chinese customers, leading to excess capacity that may take several quarters to digest,” said Summit Insights Group analyst Kinngai Chan, in an investor note. “In addition, uncertainty around Intel’s 18A and 14A nodes is creating further headwinds for WFE suppliers … We anticipate 2026 WFE spending will remain soft and expect semiconductor capital equipment names, including AMAT, to underperform the broader semiconductor peer group in the coming quarters.”
However, not all firms were so dire. Needham reiterated its Buy rating and hefty price target of $240.
“Looking forward into FY26, management still appears bullish on DRAM (even after growing ~50% YoY in ex-China DRAM in FY25), but bearish on China (citing ‘several quarters’ of continued weakness), and cautious on the timing (not the trend) on leading-edge logic demand,” said Needham analysts Charles Shi and Ross Cole. “As such, our FY26 estimates are reset lower. We would be buyers on the weakness.”
Meanwhile, Morgan Stanley maintained its Equal-weight rating but nudged its price target up to $172 from $169.
“We want to like AMAT given the DRAM share gains and the relative attractiveness of DRAM WFE into 2026, but this earnings report raises difficult questions about share position at TSMC (TSM) GAA and the perception of earnings driven by China ICAPS,” said Morgan Stanley analysts, led by Shane Brett, in a note.
Appled Materials competitors Lam Research (LRCX) and KLA (KLAC) were down 4% and 5%, respectively, during early Friday trading.