Applied Materials’ stock plummeted over 14% in after-hours trading despite posting solid Q3 results, with revenue rising 8% to $7.3 billion—beating analyst estimates of $7.22 billion—and earnings per share reaching $2.48, above the expected $2.36. The crash followed a dismal Q4 forecast, projecting revenue between $6.2 billion and $7.2 billion, far below the anticipated $7.33 billion. The company cited macroeconomic uncertainty and geopolitical tensions, particularly in China, which accounted for 35% of Q3 sales. U.S. export restrictions have severely dampened demand for chipmaking equipment, with executives noting "uneven demand" from key clients as Chinese firms pause orders to optimize existing capacity.
Sector-Wide Pressure
Analysts debate whether the downturn is temporary or structural, but warnings from peers like ASML suggest broader industry strain. While Applied Materials’ year-to-date gain of 15.7% still outpaces the Nasdaq, further escalation in trade restrictions could erase this advantage. Investors fear the semiconductor sector’s AI-driven boom may falter if geopolitical risks persist.
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