Applied Materials Stock At $373: Bargain Or Warning?
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Every AI chip starts in a machine. Applied Materials, Lam Research and KLA build the tools that deposit, etch and inspect the layers on a silicon wafer, so when Big Tech spends on AI, a slice of that money ends up as their orders. In the past month all three fell 22% to 30%, and they now sit about 49% below their June highs. Is that the bargain of the AI selloff, or the first sign the spending is about to slow? We’ll answer with their own history. There’s a sharper question underneath: at what price would you be glad to own one, and are you willing to say so before Thursday? We’ll come back to that at the end.
“Decide the price you would happily pay, before the market offers it.” – Anonymous
Where Are They Now?
Tuesday’s close, Trefis data, with Nvidia for comparison:
| Stock | Tue close | Below 52-wk high | 12 months |
|---|---|---|---|
| Applied Materials | $372.53 | −48.5% | +59.3% |
| Lam Research | $222.39 | −48.7% | +34.3% |
| KLA | $152.99 | −49.3% | +26.3% |
| Nvidia | $168.89 | −29.4% | −14.9% |
Nearly cut in half from the top, yet still up on the year. That’s what a round trip looks like.
How can a stock be down 49% and up 59% at the same time? Look at the path. All three bottomed a year ago and peaked together on June 30.
| Stock | Low, Nov 2025 | High, Jun 30 | Tue |
|---|---|---|---|
| Applied | $220.23 | $723.00 | $372.53 |
| Lam | $139.59 | $433.33 | $222.39 |
| KLA | $109.71 | $301.71 | $152.99 |
Up 175% to 228% in seven months, then down about 49% in four.
Applied’s record close of $723.00 came on June 30, 2026. The fall since then is the AI trade unwinding, which we’ve been following all week: the Nasdaq dropped 5.5% on Nov 5 alone, and after a strong October jobs report and Tuesday’s hot inflation report, traders fully expect a Fed rate hike in December, per CME FedWatch.
Why Do The Toolmakers Fall So Far?
Because they’re the bill, not the meal. The four biggest AI buyers spent about $1.15 on capital projects for every dollar of cash their businesses brought in last quarter. That money pays for chips, and chip makers in turn pay for the machines to make more chips. If the buyers ever slow down in 2027, the toolmakers feel it first and hardest: a chip maker that expects flat demand doesn’t need a single new machine.
That’s why the market sells them ahead of time, on the fear of a slowdown rather than the fact of one. The same pressure is hitting the most borrowed-against AI names, such as CoreWeave, which reported Tuesday night (see Buy, Sell Or Hold CoreWeave Stock At $49?).
Has This Happened Before?
Three times since 2003 in Trefis price history, each peak-to-low, dividends included:
| Fall | Applied | Lam | KLA |
|---|---|---|---|
| 2007-08 | −63.8% | −75.0% | −75.2% |
| 2018 | −52.3% | −45.0% | −32.2% |
| 2022 | −55.1% | −56.4% | −40.3% |
| 2026, to Nov 5 | −55.8% | −57.2% | −56.9% |
At the Nov 5 low, Applied’s fall was as deep as 2018 and 2022. KLA’s was its deepest since 2008.
Here’s what happened next for Applied, measured from the first close 50% or more below its peak:
| Fall | First close 50% below | 12 months later | Back at peak |
|---|---|---|---|
| 2007-08 | Oct 27 2008 | +14.0% | Mar 2014 |
| 2018 | Dec 21 2018 | +105.2% | Nov 2019 |
| 2022 | Sep 30 2022 | +68.5% | Dec 2023 |
Twice the halfway point was close to the bottom. Once it came before a further 28% drop and a five-year wait.
What made 2008 different? In 2018 the trouble was a memory-chip glut and trade fights with China; in 2022 it was rising rates and a post-pandemic chip glut. Both times, chip makers paused orders but kept building for the next cycle. In 2008 the financial crisis cut demand for everything, and chip makers cut machine buying by almost two-thirds in two years. Lam and KLA lost three-quarters of their value; Applied took until 2014 to get back. So the question for 2027 isn’t whether the toolmakers are down a lot. It’s whether their customers keep spending.
What Happens On Thursday?
Applied reports its fiscal fourth quarter on Thursday, Nov 12, with a call at 4:30 pm ET. It told investors in August to expect about $10.25 billion of revenue, give or take $500 million, after a record $9.12 billion quarter, up 25% from a year earlier. China was about 28% of that quarter’s revenue, $2.51 billion, down from 35% a year before, because the rest of the world grew faster. China matters twice over: export rules can cut it, and Chinese chip makers have been some of the steadiest buyers.
What’s The Bigger Number?
Step back to 2002. Applied closed that year at $13.03. On Tuesday it closed at $372.53, about 29 times higher, roughly 15% a year, price only. That run went through all three falls in the table above, including a 64% drop and a five-year wait. The investors who collected it weren’t the ones who timed the bottoms. They were the ones who knew what they’d pay, and owned an amount they could hold through 2008.
So, Bargain Or Warning?
Honest answer: it’s both, and the price alone can’t tell you which. A fall of more than half has been a bargain twice in this data and a warning once. The difference wasn’t the depth of the first drop. It was whether chip makers kept ordering machines. Thursday is the first read on 2027.
Which brings us back to the question we promised: at what price would you be glad to own one? If you can name it, you don’t need to guess about Thursday.
What Can You Do This Week?
Hold a position that works either way. Four steps:
1. Size the group from its worst fall. In 2008 Lam and KLA fell 75%. Treat the three as one bet on chip spending. If you’d accept a 2% to 3% hit to your portfolio from that bet going wrong, the group should be no more than about 2.7% to 4% of it. Count what you already own through index and semiconductor funds first.
2. Commit at a price. One marker for Applied: $260, about where it would sit after a 2008-sized fall from its record (−63.8% from $723.00 is about $262). A limit order there commits you. A cash-secured $260 put expiring Dec. 17, 2027 would pay about $28.50 a share at Tuesday’s close (midpoint of the bid and ask), or about $2,850 a contract, with $26,000 set aside. That is an effective price near $232, about 38% below Tuesday’s close, if the shares are put to you. (Educational, not a recommendation: below $260 you own it, and it can keep falling.)
3. Rebalance by rule. If the group grows past the top of your band, trim back. If it falls, add only at your commitment prices.
4. Harvest. If you bought near the June highs in a taxable account, booking the loss banks the tax benefit; swapping into a different equipment maker, rather than buying back within the 30-day wash-sale window, keeps your exposure. A tax adviser can confirm what applies to you.
What it replaces: buying Thursday’s pop or selling Friday’s drop, on one quarter’s guide.
What to watch Thursday: the next-quarter outlook and what management says about orders; China’s share (does it keep falling from 28%, and why); the 2027 wafer-fab equipment outlook, the industry’s spending on chip-making machines. A higher 2027 view says the customers are still building. A cut is the warning.
Applied, Lam and KLA are down about 49% from June because they’re the bill for the AI build-out, and the market is pricing a slowdown before it happens. Applied fell this far in 2018 and 2022 and was sharply higher a year later; in 2008 it took five years to recover. Size the group to survive a 75% fall, set your price before Thursday, and watch the 2027 outlook and China.
What Should You Ask Next?
- Can Applied Materials stock deliver 36% sales growth? What has to happen in 2027.
- Which big stocks expect faster growth but got cheaper this year?
Follow this story with us: we’ll add Thursday’s numbers and show what they say about 2027.
Do You Know Your Price?
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