Applied Materials under pressure: US tariffs and China crisis weigh on shares!

Applied Materials under pressure: US tariffs and China crisis weigh on shares!

U.S. tariffs and associated global uncertainties are currently placing significant strain on companies in the technology sector, particularly Applied Materials. The company relies heavily on Asian customers, with 37.2% of net sales coming from China. As a result, imported tariffs and possible retaliation could significantly impact the company's profit margins. In the current political climate, many chip manufacturers are reluctant to make new investments, which could have a negative impact on Applied Materials' order situation, reports finance.net.

However, the current market situation also offers opportunities for Applied Materials. If the US government shifts back chip production, new semiconductor factories in the US could result in increasing demand for the company's specialized equipment. In addition, demand for advanced packaging is forecast to increase, which could reach $79 billion by 2034.

Current market development

Applied Materials shares have fallen 4.19% since the beginning of the year to $155.81. In just a year, it has lost about a quarter of its value and is now 39% below its 52-week high of $255.89. Despite these declines, 20 Wall Street analysts have issued a 12-month price target on the stock in the past three months, with 16 analysts issuing a buy rating. The average price target is $203.03, indicating a potential of around 30%.

On May 12, 2025, the Nasdaq closed at $167.99 for Applied Materials, representing a change of +7.96% in the last five days and +8.65% year-to-date. Analysts such as B. Riley and Cantor Fitzgerald reiterate a Buy rating for the company, while the median price target is $200.11, which also shows a positive gap, as marketscreener.com reported.

Future prospects and challenges

Challenges from Trump tariffs could cost U.S. chip tool makers more than $1 billion a year, further intensifying Applied Materials' competitive situation. In the past, the company has also benefited from strategic partnerships, such as the recent acquisition of a 9% stake in packaging company BESI.

In summary, Applied Materials operates in a complex and uncertain economic environment. While dependence on Asian markets and political tensions present challenges, opportunities could arise from the relocation of chip production to the US and a growing market for advanced packaging.