Valued at a market cap of $128.1 billion, Applied Materials, Inc. (AMAT) provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. The Santa Clara, California-based company partners with top chipmakers globally, helping them design and manufacture faster, smaller, and more power-efficient devices, while also offering maintenance and optimization solutions to improve factory productivity and efficiency.

Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and AMAT fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the semiconductor equipment & materials industry. The company’s strong focus on R&D and innovation allows it to drive progress in areas such as AI, 5G, automotive, and consumer electronics. Its specialty lies in nanomanufacturing technologies, particularly advanced deposition, etching, and inspection tools, that enable the creation of smaller, faster, and more power-efficient chips. 

This tech giant has slipped 25.5% from its 52-week high of $215.70, reached on Oct. 15, 2024. Moreover, shares of AMAT have gained marginally over the past three months, lagging behind the Technology Select Sector SPDR Fund’s (XLK) 13.3% rise during the same time frame.

In the longer term, AMAT has declined 16.7% over the past 52 weeks, considerably underperforming XLK’s 19.6% uptick over the same time period. Moreover, on a YTD basis, shares of AMAT are down 1.2%, compared to XLK’s 12.9% surge. 

To confirm its bearish trend, AMAT has been trading below its 200-day and 50-day moving averages since mid-August.

AMAT delivered better-than-expected Q3 results on Aug. 14, yet its shares plunged 14.1% in the following trading session as investors were disappointed by its underwhelming Q4 guidance. The company expects adjusted EPS to be $2.11 and projects revenue of $6.70 billion for the current quarter, both of which are below the consensus estimates. Nonetheless, on the upside, its Q3 performance was solid. Its revenue climbed 7.7% year-over-year to $7.3 billion, beating estimates by 1.4%, while its adjusted EPS rose 17% to $2.48, topping analyst forecasts by 6%.

AMAT’s underperformance looks pronounced when compared to its rival, Lam Research Corporation (LRCX), which soared 24.4% over the past 52 weeks and 38.7% on a YTD basis. 

Despite AMAT’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy” from the 35 analysts covering it, and the mean price target of $194.29 suggests a 20.9% premium to its current price levels.