Earnings beat across the board, and guidance beat expectations too—yet the stock fell 2.7% on Friday. What exactly is the market worried about with Applied Materials’ earnings?
Applied Materials ($AMAT ) reported its fiscal Q4 2026 results after Thursday’s close: revenue of $10.41 billion, up 53% year over year and a quarterly record; adjusted EPS of $4.16, up 92% year over year. Both beat expectations (market estimates were about $10.3 billion and $4.06, respectively). Semiconductor Systems revenue was $8.0 billion, up 64% year over year, with demand for advanced packaging still accelerating.
The guidance didn’t disappoint either: for fiscal Q1 2027, the company forecast revenue of $11.1 billion and EPS of $4.35, both above expectations. Management also explicitly forecast for the first time that wafer fab equipment spending would grow by more than 30% in 2027.
But the market wasn’t buying it on Friday: the stock closed at $370.50, down 2.74%, after falling as low as $352.23 intraday, a drop of more than 7%. JPMorgan cut its price target from $660 to $500, while Needham cut its target from $580 to $470. Both maintained Buy/Overweight ratings—in effect, saying, “The company is fine,” while also saying, “Don’t expect the stock to go that high.”
Why couldn’t the stock gain ground? Three reasons: First, the market was focused on the “whisper number” of $4.20. Earnings beat consensus, but not the whisper number. Second, the entire AI hardware sector fell on Friday: the Nasdaq dropped 0.91%, AMD fell 8.8%, and even Cisco dropped 6.2% despite beating earnings expectations. Third, the stock had already been cut in half from its June 30 peak of $739.67. Even great earnings are now just “in line with high expectations.”
My take: Applied Materials’ earnings are like a mirror. Demand for AI infrastructure is real—Semiconductor Systems revenue grew 64%, advanced packaging is expected to grow about 90% this year, and equipment spending is projected to rise more than 30% in 2027. The numbers are increasingly compelling. But the market is no longer focused on “how much the company sold”; it’s focused on “how much the stock has already risen.” A post-earnings drop despite a beat shows that this pullback isn’t due to a problem with demand; it’s expectations and valuation being deflated. Watch two signals next: whether Nvidia’s earnings after Tuesday’s close can shore up the AI narrative, and whether Applied Materials can deliver on its $11.1 billion revenue guidance next quarter. If it does, the market may assign the stock a higher valuation again. If not, the deflation may not be over.
Data as of: 2026-11-14 14:00 UTC
For informational purposes only; not investment advice.
Applied Materials ($AMAT ) reported its fiscal Q4 2026 results after Thursday’s close: revenue of $10.41 billion, up 53% year over year and a quarterly record; adjusted EPS of $4.16, up 92% year over year. Both beat expectations (market estimates were about $10.3 billion and $4.06, respectively). Semiconductor Systems revenue was $8.0 billion, up 64% year over year, with demand for advanced packaging still accelerating.
The guidance didn’t disappoint either: for fiscal Q1 2027, the company forecast revenue of $11.1 billion and EPS of $4.35, both above expectations. Management also explicitly forecast for the first time that wafer fab equipment spending would grow by more than 30% in 2027.
But the market wasn’t buying it on Friday: the stock closed at $370.50, down 2.74%, after falling as low as $352.23 intraday, a drop of more than 7%. JPMorgan cut its price target from $660 to $500, while Needham cut its target from $580 to $470. Both maintained Buy/Overweight ratings—in effect, saying, “The company is fine,” while also saying, “Don’t expect the stock to go that high.”
Why couldn’t the stock gain ground? Three reasons: First, the market was focused on the “whisper number” of $4.20. Earnings beat consensus, but not the whisper number. Second, the entire AI hardware sector fell on Friday: the Nasdaq dropped 0.91%, AMD fell 8.8%, and even Cisco dropped 6.2% despite beating earnings expectations. Third, the stock had already been cut in half from its June 30 peak of $739.67. Even great earnings are now just “in line with high expectations.”
My take: Applied Materials’ earnings are like a mirror. Demand for AI infrastructure is real—Semiconductor Systems revenue grew 64%, advanced packaging is expected to grow about 90% this year, and equipment spending is projected to rise more than 30% in 2027. The numbers are increasingly compelling. But the market is no longer focused on “how much the company sold”; it’s focused on “how much the stock has already risen.” A post-earnings drop despite a beat shows that this pullback isn’t due to a problem with demand; it’s expectations and valuation being deflated. Watch two signals next: whether Nvidia’s earnings after Tuesday’s close can shore up the AI narrative, and whether Applied Materials can deliver on its $11.1 billion revenue guidance next quarter. If it does, the market may assign the stock a higher valuation again. If not, the deflation may not be over.
Data as of: 2026-11-14 14:00 UTC
For informational purposes only; not investment advice.
