Semiconductor company Applied Materials (AMAT) is set to report its second-quarter earnings on May 15. Wall Street is predicting earnings per share of $2.31 and revenue of around $7.13 billion. These estimates represent an increase from last year’s figures of $2.09 and $6.64 billion, respectively. However, analysts are cautious about the stock.
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Indeed, Cantor Fitzgerald recently lowered its price target on AMAT stock from $220 to $200 and warned that there may be continued volatility ahead. While President Trump’s 90-day pause on tariffs outside of China helped ease some concerns, analysts are still watching for new semiconductor-related trade restrictions and updates to U.S. rules on AI chip exports. Even so, Cantor believes that AMAT is likely to deliver a modest earnings beat, supported by positive trends seen in other chip equipment companies.
Separately, B. Riley also trimmed its price target from $250 to $215 but kept a Buy rating on the stock. Analyst Craig Ellis thinks that AMAT will report a solid quarter due to strong demand from TSMC (TSM), which is gaining market share. That demand should help offset any weakness from Intel’s (INTC) loss of market share. Investors should listen closely during the earnings call for updates on AI demand, new equipment orders from chipmakers, and how AMAT is managing risks tied to China.
What Do Options Traders Anticipate?
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a 5.6% move in either direction.
Is AMAT Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMAT stock based on 10 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMAT price target of $193.33 per share implies 11.2% upside potential.
