Valued at a market cap of $128 billion, Applied Materials, Inc. (AMAT) is a global leader in materials engineering solutions that provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. The Santa Clara, California-based company’s products help chipmakers improve manufacturing precision, efficiency, and yield. 

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 stands out for its broad and diversified product portfolio, covering deposition, etching, inspection, and metrology tools. Its deep integration of AI and data analytics into manufacturing processes helps improve yields and reduce defects. It benefits from strong R&D capabilities, a large installed base, long-term customer relationships, and strategic exposure to high-growth markets, making it a pivotal player in the future of tech innovation.

This materials engineering giant has slipped 37.7% from its 52-week high of $255.89, reached on Jul. 10, 2024. Nonetheless, it has outpaced the Dow Jones Industrial Average’s ($DOWI) 3.7% drop over the past three months, with its shares up marginally over the same time frame.

However, in the longer term, AMAT has declined 27.9% over the past 52 weeks, considerably underperforming DOWI’s 8.7% returns over the same time frame. Moreover, on a YTD basis, shares of AMAT are down 1.9%, compared to DOWI’s slight loss.

To confirm its bearish trend, AMAT has remained below its 200-day moving average since mid-October, 2024. However, it has been trading above its 50-day moving average since early May.

On May 15, AMAT delivered mixed Q2 results, and shares of the company plunged 5.3% in the following trading session. On the upside, the company posted record adjusted EPS of $2.39, up 14.4% year-over-year and 3.5% above analyst estimates. This strong profitability was driven by higher adjusted operating income across all its reportable segments, along with improvements in both adjusted gross profit margin and adjusted operating profit margin. However, while its net revenue of $7.1 billion grew 6.8% from the year-ago quarter, it came in slightly below Wall Street estimates. 

Nonetheless, the management highlighted that despite the dynamic economic and trade environment, the company didn’t experience any significant changes to customer demand and expressed confidence in its ability to adapt to shifting market conditions, citing its resilient global supply chain and diversified manufacturing capabilities. 

AMAT has also underperformed its rival, Lam Research Corporation’s (LRCX) 13.4% drop over the past 52 weeks and 16.5% rise on a YTD basis. 

Looking at AMAT’s recent outperformance relative to the Dow, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy” from the 33 analysts covering it, and the mean price target of $199.50 suggests a 25.1% premium to its current price levels.