Applied Materials Stock: Time To Buy After 9% Drop In The Past Week?

by Trefis Team
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The stock price of Applied Materials (NASDAQ:AMAT) reached its 52-week high of $146 in April 2021, and has since dropped from that level. Further, the stock fell 9% in the past week, to levels of around $129 currently. With the company’s Q3 2021 earnings due next week, the stock price has faced some pressure. Earlier this week a report stated that order-filling time for semiconductor companies (which is the time taken to fulfill a semiconductor order) has risen to a record multi-year high of 20 weeks, and businesses across a variety of industries are suffering due to this. This has dwindled investor expectations around semiconductor companies, which has affected Applied Materials’ stock price, among that of its semiconductor peers.

After a 9% fall in a week, will Applied Materials stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for AMAT stock average 5.2% in the next one-month (twenty-one trading days) period after experiencing a 9.2% drop over the previous week (five trading days).

But how would these numbers change if you are interested in holding AMAT stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Applied Materials stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF AMAT stock moved by -5% over five trading days, THEN over the next twenty-one trading days AMAT stock moves an average of 5.5%, with a decent 67% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of Applied Materials Stock Movements:

Question 1: Is the average return for Applied Materials stock higher after a drop?

Answer: Consider two situations,

Case 1: AMAT stock drops by 5% or more in a week

Case 2: AMAT stock rises by 5% or more in a week

Is the average return for AMAT stock higher over the subsequent month after Case 1 or Case 2?

Applied Materials stock fares better after Case 1, with an average return of 5.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 3.1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how AMAT stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold AMAT stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For AMAT stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for AMAT after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

It’s pretty powerful to test the trend for yourself for Applied Materials stock by changing the inputs in the charts above.

 

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

See all Trefis Price Estimates and Download Trefis Data here

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