NEW YORK, March 6, 2026, 05:12 EST
Applied Materials, Inc. dropped 3.1% on Thursday, closing at $346.53. That brings the chip-equipment giant roughly 12.5% under its February 25 peak, when AI enthusiasm had sent the stock surging.
This drop stands out—Applied is widely seen as a direct way to play the AI push on Wall Street. Shares shot up 11% last month after the company posted a bullish forecast. “ Artificial intelligence infrastructure demand is immense, and supply is scarce,” noted Morningstar’s William Kerwin. Reuters
Applied projected second-quarter revenue near $7.65 billion, topping Wall Street targets. CEO Gary Dickerson attributed the strong forecast to “the acceleration of industry investments in AI computing.” At the time, Rothschild & Co. Redburn analyst Timm Schulze-Melander noted, “memory and logic-foundry capex growth are two sides of the same coin”—referring to capital spending. HBM, or high-bandwidth memory, is stacked and pairs with AI processors. Logic chips handle the actual computation. Reuters
The spending surge hasn’t gone anywhere. Broadcom this week projected its AI chip revenue could surpass $100 billion come 2027. At least $630 billion—Reuters’ number for what major tech firms are likely to pour into AI infrastructure this year. SEMI is calling for global chip-equipment sales to climb 9% to $126 billion by 2026. That’s the climate propping up Applied Materials, along with rivals Lam Research and KLA.
Applied’s top brass aren’t shy about their optimism. Speaking at a Morgan Stanley event on March 2, Semiconductor Products Group President Prabhu Raja said, “The short answer is we are in a much, much better place.” He cited better customer visibility, tighter planning with suppliers, and factory capacity that, according to Raja, could hit twice the pre-COVID mark. He also singled out HBM packaging and 3D chiplet stacking—techniques for linking or layering advanced chips—as standout growth themes for 2026. Investing
Competition is sharpening. ASML, the Dutch company, told Reuters this week it’s aiming to expand in advanced packaging for AI chips. Chief Technology Officer Marco Pieters flagged that “accuracy is becoming more and more important” as stacked chip designs take hold. For Applied, that’s significant—advanced packaging is turning into a more lucrative stretch of the chip supply chain. Reuters
But the company’s recent history isn’t without complications. Just last month, Applied settled with U.S. authorities for $252 million over claims it illegally shipped ion implanters—crucial equipment for making chips—to China’s leading chip producer, Semiconductor Manufacturing International Corp (SMIC), routing the exports through a South Korean affiliate. Applied has acknowledged that stricter U.S. rules on exports are set to hit China-related sales in 2026. CEO Dickerson flagged a sharp drop in China’s revenue share for Applied, now down to the mid-20% range from nearly 40%, as some foreign competitors remain able to sell where Applied now faces restrictions.
Investors pulled back on Thursday after a sharp 8% jump in oil prices tied to the Middle East conflict reignited inflation concerns. The Dow shed 1.61%, while the S&P 500 slipped 0.56%. The Nasdaq dropped 0.26%. Applied’s upbeat AI story couldn’t escape the broader macro hit—sometimes one day’s headlines are enough.
