Applied Materials Stock At $371: Why Is It Half Price?
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Every chip in your phone, your laptop and the data centers behind ChatGPT and Claude was made on machines like Applied Materials’. When chipmakers build, Applied sells. Analysts expect a building boom: sales from about $31 billion over the last 12 months to $47 billion in the year to October 2027, and $57 billion the year after.
Yet the stock’s price-to-sales multiple peaked at about 20 on June 30 and is about 9.5 now. That’s the anomaly: growth expected to speed up, valuation cut in half.
That gap reaches far beyond chip investors. Applied sits inside S&P 500 index funds, so a portfolio of a few million dollars often owns it, and the chip cycle, several times over. How much of yours rides on it? A Trefis partner firm can show you in a free 15-minute call.
What Happened?
June: the memory scare. On June 23 a crash in Korean stocks, led by SK Hynix and Samsung, hit memory shares. Micron and SanDisk fell 13% and 14% that day. Memory makers are among Applied’s fastest-growing buyers, so the fear spread.
October: no number. At its Oct. 13 investor presentation, Applied gave no forecast for chip-equipment spending and said available factory space could affect it. The stock fell about 24% in 9 trading days.
Meanwhile, forecasts held up. Analysts expect earnings per share to rise about 46% in the year to October 2027. Investors simply pay less for that growth: about 20 times next year’s earnings now.
The forecasts didn’t break. The price investors pay for them did.
Has This Happened Before?
| Fall | Drop | Back to the old high |
|---|---|---|
| Mar to Dec 2018 | −53% | Nov 2019 |
| Jan to Oct 2022 | −55% | Jan 2024 |
| 2026 so far | −56% | ? |
Both times the stock recovered fully within about 11 to 15 months of the bottom.
Investors aren’t saying the forecast is wrong. They’re saying it might be a peak. On Thursday, Nov. 12, watch for one thing: any 2027 number from management. A confident one could close the gap; silence would likely keep the discount.
What Should You Ask Next?
- Micron Stock At $733: Why Did Memory Stocks Crash? The June memory scare, from the buyer’s side.
- Can Applied Materials Stock Jump 50%? What it would take for the gap to close.
- How Much Downside Is Left In Applied Materials Stock? The risk if the discount stays.
If you have $1 million or more invested, get a second opinion on your chip exposure in a free 15-minute call with a Trefis partner firm.
For questions about this article or underlying research, email help@trefis.com.