Applied Materials Stock Plummets: What Triggered the August 2025 Crash?

Semiconductor giant Applied Materials just got sucker-punched by the market—here’s why traders are hitting the sell button.

Blood on the fab floor

No fancy jargon—just a brutal selloff. The stock got caught in the crossfire of supply chain jitters and overheated valuations. Classic case of Wall Street’s ‘shoot first, ask earnings later’ mentality.

Chipmakers in the crosshairs

When the sector sneezes, Applied catches a cold. Ripples from Taiwan’s latest export curbs sent shockwaves through the equipment suppliers. Because nothing says ‘stable investment’ like geopolitical roulette with your wafer tech.

Silver lining or fool’s gold?

Dip buyers are circling—after all, the machines building AI’s hardware backbone don’t become obsolete overnight. But with PE ratios still digesting last quarter’s ‘adjustments’, bargain hunters might be catching a falling fab tool.

Image source: Getty Images.

Applied Materials Q3 earnings

Not all the news was good. Q3 sales grew 8% year over year, and operating profit margin improved by almost 2 full percentage points. However, net income inched up only 4%, although earnings per share matched sales growth at 8%. Earnings per share as calculated according to generally accepted accounting principles (GAAP), moreover, lagged adjusted earnings significantly, coming in at not $2.48 but just $2.22 per share.

Applied Materials' worst news, however, concerned not Q3 profit, but Q4 guidance. Applied warned that it will earn only about $2.11 per share, adjusted, in Q4. Furthermore, sales will decline sequentially, falling by about 8% to perhaps $6.7 billion.

Is Applied Materials stock a sell?

Applied blamed "a dynamic macroeconomic and policy environment, which is creating increased uncertainty and lower visibility in the NEAR term," for lowering guidance in Q4. Of particular concern, management says "digestion of capacity" in China (which stocked up on semiconductor manufacturing equipment to hunker down for President Trump's tariffs) will weigh on Q4 sales. Additionally, purchasing activity by other "leading-edge customers" is looking lumpy, further disrupting sales growth rates.

At 23 times trailing earnings, Applied Materials stock may not look awfully expensive. If sales are starting to shrink, however, looks may be deceiving -- and it may be time to start thinking about selling.