Applied Materials Seen 19% Undervalued as Stock Slides Despite Strong Results

Analysts suggest Applied Materials may be undervalued by about 19% following its latest earnings and guidance release. Despite beating expectations, the stock extended its decline overnight, reflecting mixed market sentiment. Additional coverage highlights the stock alongside two AI exporters as noteworthy picks, while live price trackers keep investors updated.

Applied Materials delivered a record fiscal third quarter and its stock fell anyway. Revenue for the quarter ended July 26, 2026 rose 25% year over year to $9.12 billion from $7.30 billion, and non-GAAP earnings per share climbed 41% to $3.50. AMAT shares nonetheless traded near $507 on August 14, down more than 5% from the prior close around $534, and extended the slide overnight.

The guidance was not the problem. Applied Materials pointed to fourth-quarter revenue of $9.75 billion to $10.75 billion against consensus near $9.6 billion, with non-GAAP diluted EPS of $4.02 plus or minus $0.20, which would be up roughly 85% year over year at the midpoint. Management tied the outlook to demand for equipment used in AI chip manufacturing.

That gap between results and reaction is what drives the current analyst framing, with some valuation work putting the shares roughly 19% below fair value after the pullback. The competing read is simpler: the stock had run hard into the print, and buyers are reassessing what multiple a cyclical equipment supplier earns even on an upgraded earnings trajectory.

Near-term margin commentary is the swing factor to watch. If gross margin guidance holds while the AI-driven equipment cycle stays intact, the post-earnings drawdown looks like multiple compression rather than deterioration in the business. If order timing slips, the same valuation gap could persist or widen.

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