AMAT Stock Falls After Wall Street Split On Q3 Results — Morgan Stanley Says Earnings Were 'Good, But Not Great'

• Morgan Stanley said the market was expecting Applied Materials to provide greater confidence following peer earnings that indicated systems shipment growth of more than 40%.
• The firm lowered its price target for Applied Materials’ shares to $642 from $646, while keeping an ‘Equal Weight’ rating on the stock.
• Analysts at BofA said investors may have been looking for more leverage in gross margins and quarter-over-quarter growth guidance closer to Lam Research.

Applied Materials Inc. (NASDAQ) shares fell about 6% in Friday’s pre-market session as Wall Street offered mixed reactions to the chip-equipment maker’s third-quarter results and outlook for the fourth quarter.

While several analysts praised the results and long-term outlook, others said expectations had been higher, citing gross-margin commentary, near-term guidance, and the pace of systems growth.

AMAT was among the top trending tickers on Stocktwits at the time of writing.

AMAT’s Earnings Were ‘Good, But Not Great’, Says Morgan Stanley

According to TheFly, Morgan Stanley described Applied Materials’ Q3 earnings as “good, but not great,” noting that the market was expecting greater confidence following peer earnings that indicated systems shipment growth of more than 40%.

“By no means is 42% systems shipment growth ‘bad,’” Morgan Stanley said, but added that investors had expected Applied Materials to provide greater confidence.

Morgan Stanley lowered its price target for Applied Materials’ shares to $642 from $646, while keeping an ‘Equal Weight’ rating on the stock.

Analysts at BofA also called Applied Materials’ third quarter (Q3) report a “solid beat/raise,” but said investors may have been looking for more leverage in gross margins and quarter-over-quarter growth guidance closer to Lam Research Corp. (LRCX). The firm lowered its price target for AMAT to $650 from $720 while keeping a ‘Buy’ rating.

UBS lowered its price target to $675 from $705 while keeping a ‘Buy’ rating. The firm cited softer-than-expected gross-margin commentary and conservative near-term guidance for its price target cut.

Deutsche Bank cut its target to $605 from $680, saying the company’s outlook remains “hazy,” while maintaining its ‘Buy’ rating.

Others On Wall Street Are More Optimistic About AMAT’s Outlook

Despite the concerns, several analysts remained positive on Applied Materials’ longer-term outlook.

JPMorgan raised its price target to $660 from $515 and maintained an ‘Overweight’ rating, saying the company’s bull thesis remains intact, supported by accelerating AI-driven wafer-fab equipment demand and improving visibility.

Bernstein also raised its target to $700 from $675 while keeping an ‘Outperform’ rating, saying the results were good and that fourth-quarter guidance was “very strong,” with strength in leading-edge foundry/logic, advanced packaging and DRAM.

While UBS trimmed its price target, the firm maintained that Applied Materials' capacity expansion and strong systems growth support meaningful long-term upside.

AMAT CEO Sees Strong 2027 Growth

Applied Materials CEO Gary Dickerson said during a post-earnings call that customers are finding ways to address clean-room constraints and are increasing demand for tool deliveries. The company has also received longer-term commitments and rolling eight-quarter forecasts from its largest customers.

“This increased demand visibility gives us high confidence that 2027 will be another strong growth year for Applied Materials,” Dickerson said. He added that the company has again raised its 2026 revenue growth forecast and expects to grow faster than the overall market.

Dickerson highlighted leading-edge foundry and logic, DRAM, and advanced packaging as key areas of opportunity, saying they are expected to account for around 80% of wafer-fab equipment growth in 2026 and 2027. Applied expects its packaging revenue to grow more than 70% in calendar 2026.

The CEO also said Applied's investments in AI are on track to accelerate revenue growth and operating profit margins, with the technology being used across R&D, services, operations and other corporate functions.

Applied Materials reported earnings per share (EPS) of $3.5 on revenue of $9.12 billion, beating expectations of an EPS of $3.39 on revenue of $9 billion, according to Fiscal.ai data.

What Retail Traders Think Of AMAT Stock

Retail sentiment on Stocktwits around Applied Materials trended in the ‘extremely bullish’ territory with message volumes at ‘extremely high’ levels at the time of writing.

AMAT stock is up 108% year-to-date and 181% over the past 12 months. The S&P 500 ETF (SPY) is up 21% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 26%.

Also See: BRUN Stock Soars After Securing Long-Term Lease To Expand GPU Compute Capacity — CEO Says 'This Gives Us Strong Visibility Into Recurring Revenue'

For updates and corrections, email newsroom[at]stocktwits[dot]com.