Applied Materials (AMAT): Earnings Today for a “Picks-And-Shovels” Tech Company

Semiconductors are back in focus as traders look toward Applied Materials (AMAT) to headline a relatively light earnings day after today’s closing bell. AMAT, which focuses on semiconductor manufacturing equipment and display products, is up almost 42% year-to-date. The stock dipped nearly -18% in about 13 trading days after August’s earnings but quickly rallied to fill the gap and then propelled shares into their 52-week highs of 242.50.

Consensus estimates for AMAT’s earnings seem to be coming in lighter than the past year. The Street is looking for EPS of $2.11 against $2.32 last year (-9.0%) and for revenue of 6.70B vs. 7.05B last year (-4.9%). However, analysts seem optimistic as Arete Research this morning raised its price target to $280 from $231 and kept its buy rating. Important areas to watch include its memory sector, revenues from China, and whether the company offers any new A.I.-related products. Meanwhile, the options market shows a potential move of about +/- $11.50 (5%) by tomorrow’s Nov. 14 expiration. 

This semiconductor sector has become even more prominent in recent months as it is a near-daily subject in Trade War wrangling and as the Trump administration makes moves to invest in chipmakers like Intel (INTC) and the raw materials used to make them like various lithium and rare earth mineral companies. Unlike the more commonly known computer chip giants such as Nvidia (NVDA) and AMD (AMD) who make high-end graphics and computational chips, Applied Materials is more of a “picks and shovels” company for the sector. AMAT and its rivals like KLA (KLAC), Lam Research (LRCX) and ASML Holding (ASML) manufacture the equipment and materials used to make the chips themselves. 

A technical look at the chart shows a supportive zone between roughly 216 to 223. This area represents two relative lows during AMAT’s recent climb, and roughly lines up with the yearly +1 Standard Deviation Channel. Before that, traders may be looking toward the 21-day Exponential Moving Average for potential support around 228. To the upside, the old highs of 242.50 are the clear point to beat, with the +2 SDC nearby just below 261.

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Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.