Applied Materials Earnings: AMAT sags as supply constraints hit semiconductor equipment supplier itself

• Applied Materials loses ground after missing top and bottom lines.
• AMAT stock remains mostly flat despite the miss.
• Mizuho drops AMAT price target to $160.

Applied Materials (AMAT) stock lost ground in Thursday's aftermarket session after missing earnings forecasts on both top and bottom lines. The semiconductor industry supplier lost nearly 5% after-hours on Thursday, but is mysteriously down just 1.1% on Friday's premarket at $109.53.

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Applied Materials Stock Earnings: Supply chains constrained until fourth quarter

AMAT earnings per share of $1.85 missed estimates by five cents but still managed to beat the $1.63 a share reported one year ago. It was revenue that worried the market. Sales of $6.25 billion missed estimates by nearly $104 million. Worse yet was the outlook handed out by management. 

"We anticipate our ability to fulfill this demand will remain constrained by ongoing supply chain challenges in the near term with incremental improvements beginning in our fourth quarter," said Chief Executive Officer Gary Dickerson in an earnings call on Thursday.

For the current quarter, Wall Street was expecting $6.73 billion in revenue. Management, however, placed the midpoint of their estimate flat at $6.25 billion and said the final figure could go $400 million higher or lower. Still, the higher end of the projection would fall below the existing average analyst forecast.

Mizuho cut its price target from $180 to $160. Analyst Vijay Rakesh still added in a positive light that "guidance implies 2023 top-line expectations higher [YoY] as [the] long-term capacity and technology roadmap remain intact, along with demand persistently strong."

Applied Materials Stock Forecast: Headed to $100

AMAT stock appears destined to reach $100. Maybe this will not happen today, but shares have been bouncing around inside a descending price channel since early April. Having bounced lower off the top trend line just two sessions ago, the next likely trend would be for AMAT to slowly drift toward the lower line somewhere around $100.

That could be a decent price for entry as a slight divergence on the Relative Strength Index (RSI) means a bullish reversal could be in the works. The first sign of this would be if AMAT can close above $116 in the next few weeks. The divergence sits between April 29 and May 11. Though the RSI moves from 34 to 36 over that period, the price action on the daily chart offers a move down from $108 to $103.

AMAT daily chart