Major Negative News! Semiconductor Giant Plummets Suddenly!

At the opening of the U.S. stock market on August 15 (Eastern Time), Applied Materials' stock price plunged sharply, dropping over 14% intraday. By the close, the decline remained at 14.07%, marking its largest single-day drop since March 2020. Its total market capitalization shrank to $125.942 billion (approximately RMB 904.5 billion).

In its latest earnings report, Applied Materials forecasted that its revenue for the fourth quarter of fiscal year 2025 would be around $6.7 billion, falling short of analysts' average expectation of $7.32 billion. The company also projected adjusted earnings per share (EPS) of approximately $2.11, below the consensus estimate of $2.38.

As a result, Citigroup removed Applied Materials from its focus list in its latest research report and lowered its target price to $205 per share. Stifel analysts also reduced their target price from $195 to $180 per share.

Gary Dickerson, CEO of Applied Materials, stated that the company is "operating in a dynamic macroeconomic and policy environment, which is creating more near-term uncertainty and lower visibility, including in our business in China."

CFO Brice Hill added that the expected revenue decline is "driven by capacity digestion in China and the nonlinearity in demand from leading customers given market concentration and fab timing."

Meanwhile, Applied Materials reported strong operational performance. The earnings showed non-GAAP EPS of $2.48 for the third quarter, up 17% year-over-year (YoY), surpassing analysts' expectation of $2.36. Revenue reached $7.3 billion, an 8% YoY increase, also exceeding the expected $7.22 billion.

The company's gross margin improved to 48.9%, up 150 basis points YoY, while its operating margin rose to 30.7%, up 190 basis points YoY. Operating profit grew 15% YoY to $2.245 billion, demonstrating the company's ability to enhance profitability while controlling operating expenses (which increased by only 5%).