President Trump’s tariffs have overshadowed Applied Materials (AMAT) stock, stirring up short-term headaches for the semiconductor equipment titan. Despite a recent rebound, shares trade ~30% below their 52-week highs, with the decline somewhat justified. Indeed, higher costs and global trade tensions could dent the company’s near-term prospects. Still, the effort to restore chip manufacturing to U.S. soil promises a lucrative payoff in the long run. Given this narrative and AMAT’s unmatched role in chip production, I’m bullish on the stock.
Even with a 90-day tariff pause on semiconductors and electronics announced last Friday, it’s clear that Applied Materials faces choppy waters. The remaining 10% global tariff hike will undoubtedly damage chipmakers like Intel (INTC) and TSMC (TSM), who depend on imported wafers, gases, and components. This will squeeze their budgets, potentially freezing orders for AMAT’s high-end tools.
Take its $20 million etching systems, for instance, or its deposition chambers, critical for cutting-edge chips. China’s retaliatory tariffs on U.S. goods further threaten AMAT’s foothold in a market that, for context, accounted for 30% of last year’s $26.5 billion in revenue.
The uncertainty is already biting. A single delayed fab can wipe out $500 million in AMAT orders, and with Asian chipmakers like Samsung rethinking expansion amid tariff chaos, you can see why the market might think that AMAT’s multi-billion-dollar backlog risks stalling. And then you have a story about Trump’s looming semiconductor-specific tariffs, which the market expects to hit within months. Undoubtedly, they keep customers jittery, as they are reluctant to greenlight projects when costs could spike overnight. It’s like a waiting game where hesitation makes more sense than action, leaving AMAT to tread carefully through a murky year.
If AMAT’s outlook wasn’t already wobbly, the company’s supply chain isn’t immune. Tariffs on niche materials, like high-purity silicon or rare-earth metals, could inflate costs, forcing the company to either absorb the hit or pass it on, risking customer pushback. So, for now, AMAT stock is facing pressure on multiple fronts.
Despite the potential headwinds I just mentioned, investors should keep their minds open and consider that a bullish case might be hiding in the shadows. If Trump’s dream of a U.S. chipmaking renaissance pans out, maybe, just maybe, Applied Materials could be the golden goose. Tariffs are designed to lure chipmakers to American soil, and AMAT, the king of deposition and etching tools, is primed to cash in.
