Applied Materials stock drops about 6.5% after sharp move below key moving averages and bearish indicators

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Applied materials drops 6.46% today

Highlights

Applied Materials reported record $7.91 billion revenue in Q2 2026, up 13% sequentially, fueled by AI chip equipment demand.
Hedge fund ownership increased sharply from 111 to 138 portfolios, but shares remained under selling pressure.
The stock is trading below near-term moving averages with technical indicators signaling oversold conditions and a likely sideways consolidation between $390.92 and $500.4.

Hedge fund inflows persist amid sustained sector-wide pressure

Applied Materials was mentioned by the Columbia Seligman Global Technology Fund for its role in providing materials engineering solutions to the semiconductor industry. In the second quarter of fiscal 2026, the company reported record revenue of $7.91 billion, representing a 13% sequential and 11% year-over-year increase driven by demand for AI wafer fabrication equipment. The number of hedge fund portfolios holding Applied Materials shares rose from 111 to 138 at the end of the first quarter, though price action has remained under broader selling pressure.

Anton Kharitonov, expert at Traders Union, sees AMAT's sharp drop as a warning signal. He notes that even record quarterly revenue and increased hedge fund interest failed to prevent broad-based selling. Technical signals confirm firm downside momentum, with price slicing under both short- and medium-term moving averages. Momentum indicators reinforce the bearish view, while high volatility and heavy intraday losses expose vulnerability to further declines. "Despite positive headlines, this setup is risky — aggressive traders should avoid bottom fishing until clear evidence of reversal emerges."

Viktoras Karapetjanc, expert at Traders Union, highlights that Applied Materials achieved record revenue growth and rising institutional engagement. He views resilient demand for AI-driven wafer fabrication equipment as a fundamental driver supporting long-term upside. Karapetjanc emphasizes that the company remains above its 200-day average, signaling a bullish structure still intact despite short-term turbulence. "Pullbacks offer attractive entry opportunities, as strong fundamentals and sector tailwinds position AMAT for further growth."

Parshwa Turakhiya, analyst, notes AMAT's oversold technical setup amid a steep 6.46% drop. He sees strong bearish momentum but also points out elevated volatility, which creates near-term trading setups around support at $442.02 and resistance at $467.01. Turakhiya believes sentiment is pressured but a bounce could materialize if buyers regain control near session lows. "With momentum stretched, I’d watch closely for a reversal sign — short-term traders could find opportunity in a technical rebound."

Momentum firmly bearish as key supports hold against volatility

AMAT is trading sharply below its 20-day ($573.18) and 50-day ($539.81) moving averages, indicating strong short- and medium-term selling pressure, although it remains above the 200-day ($369.48) moving average, which maintains a longer-term bullish tilt. Immediate resistance stands at $467.01, with support at $442.02. Momentum indicators confirm a strong bearish tone: MACD and ADX highlight broad selling and a weak trend, while the RSI at 37.8, CCI at -176.12, and Stochastic RSI at 0 signal oversold conditions. Bull/Bear Power at -54.01 and the Awesome Oscillator also point to sellers dominating intraday momentum, with the stock down $30.8 today following a downside gap. Intraday volatility is elevated at 7.06%, and the price is trading near session lows, keeping the tone firmly negative.

Earlier, analysts noted that Applied Materials faced persistent selling despite maintaining a bullish long-term technical profile. The recent acceleration of downside momentum amid record revenues and heightened volatility raises the importance of monitoring whether support at $442.02 can contain further weakness in the days ahead.

Source of Data: AMAT Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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