Applied Materials Stock (AMAT) Drops Despite Analyst Target Increase

Applied Materials stock (NASDAQ: AMAT) is moving lower this morning, down 5.48% off the back of earnings, despite a price target hike from Citi. 

The stock is currently trading at $211, a decrease of $12.23 in the pre-market, having already dropped 3.25% during Thursday's regular trading session as markets took a dip from highs. While the stock has demonstrated a 36.22% gain year-to-date, the current dip highlights the volatility present in the semiconductor sector.

Applied Materials' fiscal third-quarter earnings revealed an 8% year-over-year increase in revenue, reaching $7.30 billion and surpassing analyst expectations of $7.22 billion. However, the company's guidance for the fourth quarter, projecting revenue of approximately $6.70 billion (plus or minus $500 million), fell short of the anticipated $7.33 billion. This more conservative outlook was attributed to reduced demand from China and uncertainties related to U.S. trade policies, factors that have weighed on market sentiment.

Despite the cautious outlook, Citi analysts have adjusted their price target on Applied Materials to $250 from $205, maintaining a Buy rating. The firm cites the company's “beat-and-raise” quarter and expectations of strong wafer fab equipment growth in 2026 as justification for the increased target. The analyst also pointed to the recent market multiple expansion as a factor influencing the target revision. However, this positive assessment contrasts with previous adjustments made by Citi, including a reduction to $194 in December 2024 and further to $170 in April 2025, reflecting earlier concerns about wafer fabrication equipment spending and global economic uncertainties.

Price Targets

The company faces headwinds from evolving U.S. trade policies and export restrictions. Applied Materials has projected a $600 million revenue loss in fiscal 2026 due to expanded U.S. export restrictions targeting China. These restrictions, imposed by the U.S. Department of Commerce, have complicated the export of certain products and services, necessitating licenses. In response to these challenges, Applied Materials announced plans to lay off approximately 4% of its workforce, roughly 1,400 employees, to simplify operations and streamline decision-making amidst tightening export controls. The restructuring aims to prepare the company for long-term growth amidst ongoing geopolitical and economic uncertainty.

The split signals of a falling stock following earnings, coupled with an analyst's increased price target, underscore the complexities that exist in markets on a daily basis. The market appears to be weighing the immediate impact of cautious guidance against the potential for future growth, creating a period of price discovery for the stock.