How Much Downside Is Left In Applied Materials Stock?

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Applied Materials (AMAT) stock fell 26.3% between October 1 and October 30, compared to a 1.1% loss for the S&P 500. A holder could fairly hope that a drop that size has already removed most of the risk. A broader market sell-off would come on top of that decline, however, and Applied has traded through 15 of those since 2007. So how hard has Applied Materials stock been hit when the whole market turned?

Applied Materials Has Usually Fallen Further Than The Market

Applied Materials stock fell an average of 23.3% across those 15 shocks, compared to 15.8% for the S&P 500. From the October 30 close of $390.09, a fall that size would take the shares to about $299.
The shares took their steepest hit during the 2008-2009 financial crisis, falling 55% as the S&P 500 lost 53%. The gap was far wider during the 2022 inflation and Fed tightening sell-off, when Applied fell 53% against 24% for the S&P 500.

Recovery times have varied widely. Measured from the low, the shares needed a median of 4.5 months to return to the high reached before each fall. Four of those recoveries took more than a year, including 14.3 months after the 2022 low and 62.8 months after the 2008-2009 one.

Sales And Margins Are Still Rising At Applied Materials

The business has steadily picked up speed. Sales growth improved in every quarter, shifting from a 3.5% decline in fiscal Q4 2025 to a 24.8% rise in fiscal Q3 2026, both when measured against the prior year. Revenue totaled $30.8 billion over the latest twelve months, up from $28.6 billion a year earlier.

Operating profit has climbed faster than sales. Applied’s operating margin rose in each of those quarters, expanding to 33.7% in fiscal Q3 2026 from 27.8% in fiscal Q4 2025. At an October 13 investor breakfast, management said it expects to gain more than two percentage points of chip equipment market share by 2030 while raising profitability. The company held $9.23 billion in cash and short-term investments at the end of July 2026, exceeding its $7.35 billion of debt and leaving Applied with no net debt.

Where Is Applied Materials Spending Its Money Now?

Applied is directing capital toward new facilities, a larger stake in a partner, and more staff. On the August 13 call, management said capital spending will stay higher than normal, though it will fall as a share of revenue in 2027. The company has since unveiled its EPIC Center, a $5 billion research facility it will share with chipmakers and partners. It also agreed on October 26 to raise its stake in BE Semiconductor Industries, its advanced packaging partner, to about 20%.

Applied is also hiring rapidly. The company added more than 1,500 people in manufacturing and customer support in fiscal Q3 2026 alone, as it builds the capacity to double its quarterly system output by 2028. When margins came up on the August 13 call, management said the ramp costs from this hiring are built into its forecast. Applied’s gross margin for fiscal Q4 2026, measured against management’s adjusted guide of about 50.4%, is the figure to watch when the company reports in November 2026.

Does This Mean You Should Act On AMAT?

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