Applied Materials Stock Is Down on Earnings. Here’s What Barchart Options Data Says Could Come Next for AMAT.

Applied Materials (AMAT) stock plummeted on Aug. 14 following the semiconductor equipment manufacturer's release of lower-than-anticipated revenue for its third quarter. While AMAT disclosed stronger-than-expected earnings of $3.50 per share for fiscal Q2, revenue growth of 25% year-over-year to $9.12 billion fell short of the $9.18 billion forecast by analysts.

Despite the revenue shortfall, options traders are optimistic, with the put-call ratio on mid-September contracts at 0.93, suggesting a bullish outlook. The upper price on these contracts, as of now, stands at $560, hinting at a potential more than 11% rally over the next four to five weeks. However, the recent drop below AMAT's 20-day moving average signals potential bearish momentum in the short term.

For Q4, the company anticipates revenue of at least $9.75 billion, exceeding the $9.6 billion consensus, and expects adjusted EPS of $4.02. This optimism stems from the surge in AI-driven demand, with AMAT's advanced packaging revenue expected to soar over 70% this year. Management plans to double manufacturing capacity by 2028 based on strong demand.

Despite the current forward P/E ratio of over 44x, which is higher compared to peers like ASML (ASML), which sits at slightly over 40x, analysts remain bullish on AMAT. The consensus rating is "Strong Buy" with a mean price target of nearly $635, indicating potential for significant growth through the year-end.