TLDR
- Applied Materials reports Q3 earnings Thursday after market close
- Wall Street expects EPS of $3.39, up 37%, and revenue of $9 billion, up 23% year-over-year
- Options markets pricing in a move of up to 7% in either direction after results
- AMAT stock has risen 104% year-to-date, though it has pulled back around 30% from June highs
- UBS raised its price target to $705; average analyst price target stands at $689
Applied Materials (AMAT) is due to report fiscal third-quarter earnings on Thursday after the closing bell. Wall Street is watching closely.
Analysts expect EPS of $3.39, a rise of around 37% year-over-year. Revenue is forecast to hit $9 billion, up roughly 23% from the same period last year. Some estimates from Visible Alpha put adjusted EPS at $3.42 and revenue at $9.04 billion, which would be a record quarter.
The stock currently trades around $525, down nearly 30% from its June highs, but still up 104% so far this year. That makes it one of the best performers in the S&P 500, which is up around 13% over the same period.
Based on options pricing, traders expect AMAT to move up to 7% in either direction by the end of the week. That could push the stock back toward $564 or drop it below $488.
Analyst Sentiment is Strongly Bullish
Ten of 12 analysts tracked by Visible Alpha rate the stock a Buy. The average price target is $689, implying over 30% upside from current levels.
UBS recently raised its price target from $570 to $705. The firm told clients there is “clearer evidence that equipment companies are raising pricing to drive margins higher.”
Citi analyst Atif Malik said he expects Applied Materials to guide above Street estimates for the October quarter, with Citi’s own revenue and EPS forecasts running 3% and 2% above consensus.
Brokerage Stifel added that equipment makers including AMAT, KLA (KLAC), and Lam Research (LRCX) are positioned to benefit from a prolonged demand cycle in the industry.
Over the past three months, EPS estimates have seen 26 upward revisions and zero downward revisions. Revenue estimates have been revised up 25 times against just one downward move.
Over the last two years, Applied Materials has beaten EPS estimates every single quarter and has topped revenue estimates 88% of the time.
Key Things Investors Will Watch
Investors will be focused on guidance for Q4 and any early comments on 2027. Order visibility, delivery timing, memory demand, pricing, and the impact of export restrictions are all expected to come up on the call.
CEO Gary Dickerson said in July that chipmakers are now providing equipment demand outlooks two years or more into the future. That points to AI-driven capital spending running longer than many expected.
Applied Materials also expects its chip packaging tool segment to grow revenue by 50% this year. The company supplies equipment to major chipmakers including TSMC (TSM), Samsung (SSNLF), Intel (INTC), Micron (MU), and SK Hynix (SKHY).
Seeking Alpha’s Quant ratings and its analyst community rate the stock a Hold, putting them at odds with the bullish Wall Street consensus.
Results are due Thursday, August 14, after the market close.
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