On August 14, Applied Materials declined 5.3% in pre-market trading, trading at approximately $507.65/share. The sell-off followed the company's fiscal Q3 earnings report that comprehensively beat expectations, triggering a classic profit-taking reaction after the stock had already doubled year-to-date.

Applied Materials reported adjusted EPS of $3.50, beating the consensus estimate of $3.40 by 2.94% and representing a 41.13% year-over-year increase. Revenue came in at $9.115 billion, surpassing the $8.991 billion estimate. The company issued fiscal Q4 guidance of approximately $10.25 billion in revenue (midpoint), well above the FactSet estimate of $9.55 billion, with adjusted EPS guidance of $4.02 versus the $3.72 consensus. The CEO projected full-year revenue growth exceeding 20%, packaging revenue growth surpassing 70%, and process diagnostics and control business growth of over 50%.

Despite the comprehensive beat and raised outlook, multiple analysts noted the stock exhibited a typical sell-the-news pattern. Post-earnings, JPMorgan raised its price target to $660, RBC Capital Markets raised to $600, while B. Riley trimmed its target from $790 to $700.

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