How Will Applied Materials Stock React To Its Upcoming Earnings?

Applied Materials (NASDAQ:AMAT) is set to report its Q3 FY’25 earnings around Thursday, August 14, 2025 (October year). Earnings are projected to come in at about $2.36 per share, up from $2.12 in the year-ago quarter, per consensus estimates, while revenues are projected to grow by about 6% to $7.2 billion. There are a couple of trends that will drive earnings. Applied Materials should continue to see a higher mix of advanced equipment, driven by applications such as generative AI and the shift to more advanced process technologies.

The AI boom is driving up semiconductor demand, given the need for more computational power, higher memory capacity, and more complex chips. The company’s advanced tools, such as those used to produce high-bandwidth memory (HBM), gate-all-around (GAA) transistors, and backside power delivery (BPD), are critical for manufacturing next-gen AI chips. That said, U.S. government restrictions on the sale of leading-edge chip making equipment to Chinese companies could moderate growth somewhat over the quarter. Over Q2, revenue originating from China fell by 37% year-over-year.

The company has $144 billion in current market capitalization. Revenue over the last twelve months was $28 billion, and it was operationally profitable, with $8.3 billion in operating profits and net income of $6.8 billion. While a lot will depend on how results stack up against consensus and expectations, understanding historical patterns might just turn the odds in your favor if you are an event-driven trader.

There are two ways to do that: understand the historical odds and position yourself prior to the earnings release, or look at the correlation between immediate and medium-term returns post earnings and position yourself accordingly after the earnings are released. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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Applied Materials’ Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 19 earnings data points recorded over the last five years, with 7 positive and 12 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 37% of the time.
• However, this percentage decreases to 36% if we consider data for the last 3 years instead of 5.
• Median of the 7 positive returns = 3.9%, and median of the 12 negative returns = -3.6%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

AMAT 1D, 5D, and 21D Post Earnings Return

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

AMAT Correlation Between 1D, 5D and 21D Historical Returns

Is There Any Correlation With Peer Earnings?

Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Applied Materials stock compared with the stock performance of peers that reported earnings just before Applied Materials. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.

AMAT Correlation With Peer Earnings

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