AMAT Rose 300%+ to a Record, Then Fell. What Its Chart Says Now

It's no secret that semiconductor-related stocks like Applied Materials have had a pretty rough week or so, with AMAT falling more than 20% after hitting an all-time high just on June 30. Let's see what Applied Materials' chart and fundamental analysis say could happen next with the semiconductor-equipment maker's stock.

Applied Materials' Fundamental Analysis

Semiconductor stocks have mostly been on a tear in 2026, with the $Philadelphia Semiconductor Index(SOX)$   hitting an all-time high on June 22 after rising 106.9% year to date.

But the sector pulled back in recent days and weeks, with the SOX giving back some 12% since June 22.

The $Dow Jones U.S. Semiconductors Index (.DJUSSC.US)$ has likewise shed about 8% since setting a record high on June 3.

Semiconductor-equipment providers like $Applied Materials (AMAT.US)$ have taken a hit as well. AMAT rose more than 300% over 12 months to peak on June 30, but has given back about 20.5% since then.

On the other hand, Morgan Stanley analyst Shane Brett recently boosted the stock's price target to $647 from a previous $502 while reiterating Applied Materials' hold-equivalent rating.

He also named AMAT as a "top pick" for the sector. (Separately, Brett raised his price targets for $Lam Research (LRCX.US)$ to $404 from $331 and $KLA Corp (KLAC.US)$ to $274 from $190 while reiterating their current ratings.)

Brett is rated at five stars out of a possible five by TipRanks and has an 81% success rate over that past two years, with an 80% average return.

Applied Materials' Technical Analysis

Here's AMAT's chart going back some seven months and running through Monday afternoon (July 6):

We will first see that AMAT had a very nice run that saw it more than double in price since 2026 began.

However, the shares then tried but failed in June to break above the upper trendline of the stock's Raff Regression model (marked in orange and pink shading).

Instead, the stock ended up testing its 21-day Exponential Moving Average (or "EMA," marked with a green line above at $590.50). Applied Materials also probably tested the swing crowd at that line as well.

The stock recently fell below the 21-day EMA, but has not yet definitively dropped under that line. (Shares were trading at $591.60 Friday morning, a shade above the 21-day EMA's $590.50.)

Meanwhile, Applied Materials has recently begun to form what might fully develop into a bearish head-and-shoulders pattern, marked with red lines at the chart's right.

However, that pattern's right shoulder has yet to fully form, hence the question mark I added to the chart's right.

But should AMAT manage to regain and hold its 21-day EMA, the stock could experience an algorithmic surge that might complete that missing right shoulder. This would be a tradeable event – although again, a head-and-shoulders pattern is one of bearish reversal.

That would create the potential for a more important test of Applied Materials' 50-day Simple Moving Average (or "SMA," denoted with a blue line at $494.10 above). That's where professional managers would likely have to make decisions concerning whether to maintain exposure to the stock. Of course, that's still nearly a $100 haircut from where AMAT has been trading at.

As for the other technical indicators in the chart above, those appear a bit shaky as well.

For example, Applied Materials' Relative Strength Index (the gray line marked "RSI" at the chart's top) has come down from overextended levels and stands just above the neutral line.

Similarly, the stock's daily Moving Average Convergence Divergence indicator (or "MACD," denoted by blue bars, a black line and a gold line at the chart's bottom) is sending less-than-bullish signals as well.

First, the histogram of the 9-day EMA (the blue bars) has moved into negative territory, which is a short-term bearish sign.

And while the 12-day EMA (the black line) and the 26-day EMA (the gold line) are both well into positive territory (a bullish signal), the 12-day line has crossed below the 26-day one. That's bearish.

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