Applied Materials (AMAT) stock tumbled on Aug. 14 after the semiconductor equipment maker reported lower-than-expected revenue for its third financial quarter. AMAT posted better-than-expected earnings of $3.50 on a per-share basis for its fiscal Q2, but a 25% year-over-year increase in revenue to $9.12 billion came in shy of the $9.18 billion that analysts had forecast. Analysts Keep Hiking Micron's Revenue and Price Forecasts - Shorting MU Puts Works Here GOOGL Stock Alert: Google Unleashes Its Biggest Weapon Against Apple Sandisk Stock Jumps on Its Investor Day Success.
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Following the post-earnings dip, Applied Materials shares are down nearly 32% versus their year-to-date high. Despite the revenue miss, options traders remain undeterred, believing the recent slide has actually created a buying opportunity in AMAT shares. The put-call ratio on contracts expiring mid-September sits at 0.93 currently, indicating a bullish skew.
And the upper price on those contracts, according to Barchart's data, is set at $560 as of writing, signaling potential for a more than 11% rally over the next 4-5 weeks. On the flip side, however, Applied Materials crashed through its 20-day moving average (MA) on Friday, indicating the bearish momentum could sustain in the near term. Despite short-term volatility, options market sentiment remains anchored to AMAT's strong long-term fundamentals and stellar forward outlook.
For Q4, the semiconductor giant guided for at least $9.75 billion in revenue, handily surpassing the $9.6 billion consensus. Adjusted EPS is also seen coming in at a robust $4.02. Management's optimism is based on booming AI-driven demand, with advanced packing revenue set to climb over 70% this year.
Citing extended customer visibility, it also signaled plans to double manufacturing capacity by 2028. That said, Applied Materials is currently trading at a forward price-earnings (P/E) ratio of over 44x, which makes it more expensive to own than its equipment manufacturer peers like ASML (ASML) at just over 40x. Despite recent declines, Applied Materials is trading at nearly 2x the price at which it started 2026.
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