Applied Materials Stock Plummets Amid Weak Chinese Demand

Web Editor

August 17, 2025

a computer chip with a flag on it being sold by a pair of scissors on top of it with a computer chip

Background on Applied Materials and its Significance

Applied Materials, a leading manufacturer of equipment for semiconductors, recently experienced a 14% drop in its stock price during Friday’s trading session. This decline was triggered by the company’s disappointing sales and earnings forecasts, raising concerns among investors that the ongoing U.S.-China trade dispute is weakening demand.

Impact on Applied Materials and its Rivals

Applied Materials joined its Dutch rival ASML Holding in the face of persistent uncertainty regarding the impact of U.S. tariffs, as both major industry players grapple with a weakening demand.

Gary Dickerson, CEO of Applied Materials, warned about reduced visibility and increased short-term uncertainty during a post-earnings call. He cited “broad implications for the semiconductor industry” due to the volatile political environment.

China, Applied Materials’ primary revenue source in the July quarter (accounting for 35% of sales), has become a growing risk for chip manufacturing tool providers as U.S. export restrictions weigh on new orders.

KLA Corp, a smaller rival with significant presence in China, anticipated weaker demand last month due to U.S.-China trade tensions affecting Chinese chipmakers’ spending.

Market Reaction and Analyst Insights

Deutsche Bank strategists noted in a statement, “China’s volatility is significantly obscuring basic earnings potential visibility both at the geopolitical and cyclical levels.”

Applied Materials forecasted revenues of $6.7 billion, with a ±$500 million variation, for the fourth quarter. This is lower than analysts’ average estimate of $7.33 billion, and their projected earnings also fell short.

The company lost over $18 billion from its $151.006 billion market capitalization on Friday. The stock has risen 1.2% year-to-date.

KLA Corp and Lam Research stocks fell 5.5% and 4.3%, respectively, following Applied Materials’ results.

Applied Materials reported an 8% increase in revenue for the third quarter, totaling $7.3 billion compared to the same period last year.

Key Questions and Answers

  • What is Applied Materials and why is its stock performance significant? Applied Materials is a major manufacturer of equipment for semiconductors. Its stock performance reflects investor confidence in the company’s ability to navigate trade tensions and maintain demand.
  • How are U.S.-China trade tensions affecting Applied Materials? The ongoing dispute has led to reduced visibility and increased uncertainty for Applied Materials, as China—its primary revenue source—becomes a growing risk due to U.S. export restrictions.
  • What did Applied Materials’ CEO say about the current situation? Gary Dickerson warned of reduced visibility and increased short-term uncertainty, citing broad implications for the semiconductor industry due to the volatile political environment.
  • How did Applied Materials’ financial forecasts impact its stock and rivals? Disappointing sales and earnings forecasts caused Applied Materials’ stock to plummet 14%. KLA Corp and Lam Research also experienced stock declines, reflecting market concerns about weakened demand in the chip industry.