Why Semiconductor Stocks AMAT, LRCX, and MU Plunged

Unlike Nvidia (NVDA) or AMD (AMD), Applied Materials (AMAT) resumed its steep downtrend after posting third-quarter results on August 15. The panic selling sent Lam Research (LRCX) and Micron (MU) lower as well.

Applied recorded a $2.48 non-GAAP earnings per share. Revenue of $7.3 billion was up by 7.7% Y/Y.

The outlook in Q4 is a concern. It projects $6.7 billion in revenue +/- $500 million and down by 4.9% Y/Y. Non-GAAP EPS will be 9% lower Y/Y at the midpoint. Underlying demand is strong for logic chips. Utilization on the leading edge is 100%, design wins increased, and capital expenditure is rising at cloud service providers.

Unfortunately, sales are uneven. Some companies are taking longer to commit their capital. They cited tariffs, trade, and other economic uncertainties. Since Applied has a high customer concentration for “leading edge” (as mentioned on the conference call), results are uneven.

Micron, a memory chip supplier, traded near a $130 high before losing nearly $10 on its share price in the last week. Still, for Q4, revenue guidance increased to $11.2 billion, up from $10.7 billion.

Lam Research peaked at $108.02 last week before closing below $100. The automatic mixed securities shelf filing might pressure the stock from here.