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AMAT Stock Drops Despite Record Quarter
15 Aug
Summary
- Applied Materials reported record revenue of $9.12 billion.
- China revenue declined to 28% of total sales.
- Stock dropped after pre-earnings rally raised expectations.
Applied Materials (AMAT) experienced a pre-market stock decline of 5.4% following the announcement of record fiscal third-quarter 2026 results. The semiconductor equipment manufacturer reported revenue of $9.12 billion, a 25% year-over-year increase, and non-GAAP earnings per share of $3.50, both surpassing analyst consensus. However, the market reacted negatively, with shares falling in extended trading.
Key concerns driving the downturn include a significant drop in revenue from China. This region now represents approximately 28% of Applied Materials' total sales, down from about 35% in the previous year. The decrease amplifies anxieties regarding the impact of U.S. export restrictions on sales to China, a critical market for advanced semiconductor manufacturing equipment.
The company's stock performance leading up to the earnings report also contributed to the sell-off. Applied Materials had already seen a substantial rally earlier in the year and a further 4% increase on the day before the announcement. This pre-earnings surge created elevated investor expectations, making it difficult for the strong quarterly results to surpass the already priced-in optimism, leading to a 'sell the news' scenario.
