Why Are Analysts Downgrading Applied Materials, Inc. (AMAT)?

Applied Materials, Inc. (NASDAQ:AMAT) is among the 15 Stocks ChatGPT Predicts Could Make You Wealthy in 5 Years. However, the stock has recently been downgraded by several analysts on light guidance for the fourth fiscal quarter, amid demand pressures in China.

Brice Hill, Senior Vice President and CFO, stated the following during the company’s Q3 FY25 earnings call on August 14:

“We are expecting a decline in revenue in the fourth quarter driven by both digestion of capacity in China and non-linear demand from leading-edge customers given market concentration and fab timing.”

Ongoing trade wars and Washington’s tightened export controls for China have made it challenging to forecast the economy’s trajectory, weighing heavily on chipmaking tool suppliers like Applied Materials, Inc. (NASDAQ:AMAT).

On August 15, BofA analyst Vivek Arya downgraded the stock to Neutral from Buy and lowered his share price target to $180 from $190, citing a ‘surprisingly weak’ fourth quarter outlook.

Following the earnings call, Daiwa Capital also cut Applied Materials, Inc. (NASDAQ:AMAT)’s price target to $170 from $185, and downgraded the stock to Neutral from Outperform.

Last week, analysts at Mizuho downgraded the stock to Neutral from Outperform and slashed its price target to $175 from $200 amid intensifying competition in China and technology transitions that may erode the company’s market share.

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