Applied Materials has rarely looked this cheap against its own earnings trajectory. The stock hit $739.67 this year. It closed Monday, Nov. 9, at $370.55. The report lands Thursday after the bell, with the company scheduled to start its earnings call at 4:30 p.m. ET.

The Business

Applied Materials makes the equipment that makes chips possible, specifically the deposition, etch, and inspection systems that allow chipmakers to build progressively smaller, faster, and more power-efficient devices. Demand for wafer fabrication equipment has been supported by AI infrastructure buildouts and ongoing investment in leading-edge logic, memory, and advanced packaging. Applied is also positioned to benefit as manufacturing complexity rises, including transitions such as gate-all-around.

The service business adds resilience. Applied Global Services has been a meaningful growth engine for the company and a stabilizer when systems cycles cool.

Why Wall Street Is Paying Attention

The numbers heading into Thursday are striking. Wall Street expects revenue to surge more than 51% year over year to about $10.30 billion, up from roughly $6.80 billion in the year-ago quarter. Analysts expect adjusted EPS of $4.06, up about 87% from $2.17 in the year-ago quarter. Applied Materials has exceeded Wall Street’s earnings expectations in each of the past four quarters.

Despite the recent selloff, analysts remain broadly constructive, with many tracking services showing a bullish consensus rating. Average target prices vary by source, but they generally sit in the roughly $625 to $650 range, implying substantial upside from current levels.

What’s Driving the Opportunity

Management raised its outlook in August, guiding fiscal Q4 revenue at $10.25 billion plus or minus $500 million and non-GAAP EPS of $4.02 plus or minus $0.20. Within that outlook, the company pointed to strength tied to AI-driven demand and highlighted that it expects to outgrow its end markets over time.

Applied Materials is being supported by a robust AI-backed semiconductor investment cycle, with increased demand tied to DRAM and high-bandwidth memory, leading-edge logic, and advanced packaging. If that cycle holds, the company’s growth profile can look very different than what the stock price now implies.

Applied Materials is not the only equipment name caught in that gap between operational strength and a punished stock price. Lam Research, which makes the same deposition and etch tools for advanced nodes, fell 40% from its June peak despite back-to-back record quarters.

On valuation, the stock looks far less demanding than it did at the highs. If the company delivers close to the guided Q4 run rate, the forward multiple implied by that earnings power is meaningfully lower than what investors were paying earlier in the year.

What Could Go Wrong

AMAT stock has been volatile alongside the broader AI and semiconductor complex. A move like this can feed on itself, with de-risking and momentum selling overwhelming fundamentals in the short term.

Fundamentally, the risks are straightforward. Any slowdown in AI-related semiconductor spending, softer DRAM investment, or delays in advanced-node capacity additions can weigh on orders. Supply-chain constraints also remain a real swing factor across the industry. The options market is pricing a move of roughly plus or minus 11% around Thursday’s report.

That kind of momentum selling does not happen in isolation. The Philadelphia Semiconductor Index crossed into bear-market territory as macro de-risking overwhelmed chip-sector fundamentals across the board.

The Bottom Line

Applied Materials is not a complicated story. It sells equipment to build the chips that power AI, it has beaten estimates four quarters running, it expects roughly 51% revenue growth Thursday, and the stock is about half the price it was at its annual high. Thursday is the first clean chance for the numbers to argue that case out loud. If management delivers on the roughly $10.3 billion consensus and reinforces its longer-term outlook, the gap between the stock price and the earnings trajectory becomes difficult to ignore.