Applied Materials Just Dropped 29% In a Month: Will November 12 Earnings Rescue or Break AMAT Stock?
Applied Materials has shed nearly a third of its value in a single month, and the chip equipment giant's November 12 earnings report now stands as either the catalyst for a recovery or proof the selloff has further to run.
A month-long decline has erased a big piece of the 2026 rally at Applied Materials (NASDAQ:AMAT | AMAT Price Prediction), and the chip equipment maker’s next earnings report is now its biggest near-term test. Applied Materials stock is down 29% over the past month to $381.01. The stock is still up 49% year to date (YTD), which shows how far it ran before the selloff.
Rivals of Applied Materials in chip equipment have taken similar hits. Lam Research (NASDAQ:LRCX) stock is down 34% over the past month to $229.50, a steeper drop than Applied’s. Meanwhile, KLA (NASDAQ:KLAC) stock is down 25% over the past month to $155.06, a smaller decline. Next up is the company’s Q4 FY2026 report, which Applied Materials has said it will release on November 12 after the market close.
What Drove Applied Materials’ One-Month Slide
Applied Materials laid out its long-term plan at a SEMICON West investor breakfast on October 13. Chip equipment stocks sold off after the plan was unveiled, as broader worries about AI spending weighed on the group.
Another hit came on October 29, when Intel (NASDAQ:INTC) issued a forecast missing expectations. Intel blamed a deadly explosion at its Israel factory and a faltering PC market, and that gloomy outlook spread across the chip sector. For Applied Materials and its peers, a major chipmaker cutting its outlook raised fresh questions about equipment demand.
How Applied Materials Differs From Lam Research and KLA
Applied Materials sells the broadest lineup of process tools among the three, spanning deposition, etch, chemical mechanical planarization, metrology and inspection, whereas Lam Research leans heavily on etch and deposition and tilts toward memory customers.
KLA, by contrast, dominates process control, inspection and metrology. Beyond tools, Applied runs Applied Global Services, which sells parts, upgrades and service for its installed base, plus a small display business.
Why Bulls See an Opening in Applied Materials’ 2030 Plan
At the October 13 event, Applied Materials set a 2030 non-GAAP gross margin target of 54% and a non-GAAP operating margin target of 40%. That compares with Applied Materials’ Q3 FY2026 non-GAAP gross margin of 50.4%. The company also targeted more than 2 percentage points of wafer fab equipment (WFE) share gain from calendar 2025 to 2030.
Services sit at the heart of the plan. Service revenue should grow more than 20% this calendar year. Applied Materials also expects it to exceed $12 billion by calendar 2030, up from fiscal 2025 Applied Global Services revenue of $6.4 billion.
Management told analysts on its August 13 call that it expects packaging revenue to grow more than 70% in calendar 2026, with process diagnostics and control growing more than 50%. CEO Gary Dickerson addressed analysts. He said, “Packaging is one of the most important areas for improving AI compute performance and power.” Following the pullback, Applied Materials stock trades at 23x forward earnings.
Risks That Could Keep Applied Materials Under Pressure
China supplied 28% of Applied Materials’ record Q3 revenue of $9.12 billion, down from 35% a year earlier. Export rules can shift fast, and any new restriction could hit a market that still accounts for a large slice of sales.
Margins pose another risk. Applied Materials’ trailing gross margin stands at 49.4%, below its 2030 target, so the plan depends on execution. Ramp costs, including hiring and training customer-support engineers, are partly offsetting the company’s margin gains in the near term.
Much of the bullish outlook at Applied Materials depends on continued AI infrastructure spending. Any pullback in data center budgets could reach equipment orders quickly, which is the same worry that weighed on the group after the investor event. The expansion still has to be powered, cooled and networked by someone, and we highlighted seven of those suppliers in a free AI infrastructure report.
What Applied Materials Has to Prove on November 12
Guidance sets the bar for the report. Applied Materials guided for Q4 revenue of $10.25 billion, plus or minus $500 million, and non-GAAP EPS of $4.02, plus or minus $0.20. Hitting Applied Materials’ Q4 gross margin guide of 50.4% would mark a first step toward the 2030 target.
Beyond the headline numbers, investors will be watching whether China demand holds steady, services growth stays on track and management sounds confident about 2027 WFE demand. Upbeat commentary coupled with a clean beat could support the bull case that the selloff priced in too much fear.
A soft margin or cautious China commentary from Applied Materials might hand the bears fresh evidence that the 2030 plan remains distant. Cautious investors may prefer to see how Applied Materials’ November 12 earnings test resolves before drawing firm conclusions.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
