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    Applied Materials (AMAT) Dropped, So What Is Behind The Move?

    Simply Wall St·11/07/2026 18:23:50
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    Applied Materials (AMAT) is back in focus after a sharp sector-wide sell-off in semiconductor and AI stocks tied to election results, shifting regulation worries, and profit taking after earlier gains.

    The share price story for Applied Materials has flipped quickly, with the stock down 36.1% on a 30 day share price return and 38.3% over 90 days, yet still showing a 23.8% year to date share price gain and a 45.4% total shareholder return over 1 year. This pattern signals fading short term momentum after a strong multi year run and shifting sentiment around AI and data center spending, even as investors wait on the upcoming earnings update to reset expectations.

    Scan how other chip equipment and AI infrastructure plays are reacting to the same macro shock by reviewing our hand picked 52 AI infrastructure stocks alongside Applied Materials.

    Applied Materials still looks like a heavyweight in AI chip equipment, yet the share price has just been cut sharply. Is this now a strong business offered at a fair price, or still a premium story?

    Most Popular Narrative: 48% Undervalued

    Applied Materials closed at $332.72, while the most followed narrative pegs fair value at $638.94 using an 11.33% discount rate. This frames today’s pullback against a much higher long term earnings and cash flow path.

    The mix shift toward leading edge foundry logic, DRAM including high bandwidth memory, and advanced packaging is expected to account for most wafer fab equipment growth in 2026 and 2027. Applied Materials is forecasting more than 70% growth in advanced packaging revenue and more than 50% growth in process diagnostics and control in 2026. This points to a richer product mix that can support margins and net income.

    See why 336 investors see Applied Materials as 48% undervalued.

    Result: Fair Value of $638.94 (UNDERVALUED)

    Still, the bullish Applied Materials narrative can crack if heavier EPIC and capacity spending keeps free cash flow tight, or if flat gross margins choke expected earnings leverage.

    Find out about the key risks to this Applied Materials narrative.

    Another View: What The Market Is Paying For Applied Materials

    A different lens comes from the current P/E. Applied Materials trades at 28.5x earnings, below the US Semiconductor industry on 36.2x, yet slightly above its peer set on 27x. The fair ratio is 34.9x, which suggests the market could move toward that level over time. Is that a safety buffer or a sign that expectations are already rich enough?

    For a deeper look at what this means in practice, including how that fair ratio stacks up against peers and sector history, See what the numbers say about this price — find out in our valuation breakdown.

    NasdaqGS:AMAT P/E Ratio as at Nov 2026
    NasdaqGS:AMAT P/E Ratio as at Nov 2026

    Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Applied Materials for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 39 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

    Next Steps

    Mixed signals on Applied Materials so far. If you want to move quickly and ground your own view in the full picture, start by weighing the 3 key rewards and 1 important warning sign.

    Looking for more investment ideas beyond Applied Materials?

    If you are weighing what to do next after this Applied Materials reset, you may want to broaden your opportunity set with a few focused stock lists built from the Simply Wall St screener.