Applied Materials (AMAT) - Stock Analysis: Is a Bullish Reversal on the Horizon?

Overview

Applied Materials is an interesting stock to watch as the semiconductor industry continues to attract attention from investors. With demand for advanced chip manufacturing and semiconductor technology remaining an important driver of the sector, the company presents an opportunity worth examining from both a technical and fundamental perspective.

Looking at the current chart, there are some encouraging signs that Applied Materials could be attempting to recover from its recent downward trend. However, the question is whether this is the beginning of a sustained reversal or simply a temporary recovery before sellers regain control.

Technical Analysis: Understanding the Current Trend

From a technical perspective, Applied Materials has experienced a considerable period of selling pressure. The chart highlights a series of lower highs and lower lows, indicating that sellers have largely maintained control of the overall trend.

However, more recent price action is beginning to show a change in momentum. Following a sharp decline towards the lower support region, buyers have started stepping back into the market, pushing the price higher and creating a noticeable recovery.

What makes this particularly interesting is that the latest candles are showing signs of strength, with price moving back above the shorter-term moving averages. This could indicate that bullish momentum is beginning to build. Nevertheless, the longer-term trend still requires confirmation, particularly while price remains below the longer-term EMA.

Triple EMA: Is Momentum Starting to Shift?

Looking at the current chart, the shorter-term EMA has started turning upwards, followed by signs of improvement in the medium-term average. This suggests that buying pressure is beginning to return following the previous decline.

The longer-term EMA, however, remains an important area to watch. It is still positioned above the shorter-term averages, reflecting the broader bearish structure that has developed over recent months.

For a stronger bullish confirmation, I would like to see the shorter-term EMA maintain its upward direction, followed by the medium-term EMA continuing to rise and eventually challenging the longer-term average. A bullish crossover would provide additional evidence that the overall trend could be changing.

MACD: Early Signs of Bullish Momentum

The MACD is providing another interesting signal. After spending an extended period in negative territory, the indicator is now showing a noticeable improvement in momentum.

The MACD line has crossed above the signal line, accompanied by green histogram bars that are beginning to expand. This is generally interpreted as a bullish momentum signal, suggesting that buying pressure is increasing relative to selling pressure.

What's particularly encouraging is the upward movement of both MACD lines. It suggests that the recent price recovery is being supported by improving momentum rather than simply a short-lived movement in price.

However, it is important to distinguish between improving momentum and a confirmed change in trend. The MACD still needs to demonstrate sustained strength, and further confirmation from the price action and moving averages would strengthen the bullish case.

Key Support and Resistance: Where Could Price Head Next?

The mapped out horizontal support and resistance zones are to help identify where Applied Materials could encounter buying interest or selling pressure.

These levels are particularly important because they provide potential areas where the market could pause, consolidate or experience a breakout before moving towards its next significant price region.

On the downside, the nearest support zone is an important area to monitor. If the current recovery loses momentum and sellers begin to regain control, this level could act as the first line of defence for buyers. A sustained move below it could expose the stock to a deeper retracement towards its previous lows.

On the upside, the next major resistance region is particularly important. A successful break above this area, followed by price holding above it, could provide the confirmation needed for a further move towards the higher resistance zones.

Beyond that, there are additional resistance areas that could become potential upside targets if bullish momentum continues to strengthen.

TipRanks and Upcoming Earnings: What Are Analysts Expecting?

Applied Materials is also attracting positive attention from Wall Street analysts. According to the TipRanks figures, the stock currently carries a Strong Buy rating, with the majority of analysts favouring a Buy recommendation.

This positive sentiment is particularly interesting with the company's upcoming Q4 2026 earnings announcement scheduled for 12 November 2026, following the US market close.

Analysts are currently forecasting earnings per share (EPS) of approximately $4.06, compared with $2.17 reported during the same quarter last year. This represents an expected year-on-year increase, highlighting the earnings growth that analysts are anticipating.

The combination of a Strong Buy rating and these earnings expectations provides an encouraging outlook for the company. However, the upcoming announcement will be an important opportunity for Applied Materials to demonstrate whether it can deliver the growth that the market is expecting.

An earnings result that exceeds expectations could potentially strengthen investor confidence and provide further support for the share price. On the other hand, any disappointment could introduce volatility, particularly if investors have already priced in strong performance.

Fundamental Analysis

The company's current P/E ratio is approximately 34, while its forward P/E sits considerably lower at around 20. This difference suggests that analysts are expecting earnings to increase over the coming financial periods.

A lower forward P/E compared with the current P/E can indicate that the market anticipates stronger future earnings. In other words, if those earnings expectations are achieved, investors could be paying a lower multiple for the company's future profitability than its current earnings valuation might initially suggest.

Of course, a forward P/E is based on estimates rather than guaranteed results. It is therefore important to consider whether the company can deliver the earnings growth that analysts are anticipating.

Nevertheless, this provides an encouraging fundamental argument alongside the technical recovery currently developing on the chart.

Conclusion

The recent recovery in price, improving MACD momentum and upward movement in the shorter-term EMAs suggest that buyers are beginning to regain some control. Meanwhile, the positive analyst sentiment, lower forward P/E and encouraging earnings expectations provide additional reasons to pay attention to the stock.

The upcoming earnings announcement could be particularly significant. With analysts expecting substantial year-on-year earnings growth, the results could influence whether investor confidence strengthens further or whether the stock experiences another period of uncertainty.

Disclaimer

This analysis is for informational purposes only and should not be considered financial advice. Investors and traders should conduct their own research and consider individual risk tolerance before making any investment decisions.