What is the expected impact of reduced Chinese demand on AMAT's revenue forecasts?

Impact on Revenue Forecasts

Applied Materials (AMAT) has warned that the “easing spending” by Chinese customers—who previously drove a rapid expansion of fabs – will shave a meaningful amount off its top line. Analysts now expect the company’s FY‑2025 revenue guidance to be trimmed by roughly 3‑5 % versus prior consensus, reflecting the loss of a key growth engine. The slowdown in China comes on top of weaker “leading‑edge” demand from other customers, meaning the revenue hit is both a regional and a product‑cycle drag. Consequently, consensus estimates for the quarter and full‑year have been revised downward, and the market has already priced in a ~13 % price drop on the news, pushing the stock into a bearish technical zone.

Trading Implications

From a technical standpoint, AMAT is trading near its 50‑day moving average with the RSI hovering around 30, signaling short‑term oversold conditions but also a lack of bullish momentum. The 13 % decline has left the stock close to its recent support around $115‑$120; a break below would likely trigger further downside, while a bounce above the 50‑day MA (~$130) could signal a short‑term rebound. For a risk‑averse trader, a modest short‑position or a protective put spread (e.g., buying a 130‑strike put and selling a 120‑strike put) can capture upside from the guidance downgrade while limiting downside. Conversely, investors who believe non‑Chinese markets can offset the China shortfall may look for a swing‑long at the $120–$125 level, targeting the next resistance near $150 (the 200‑day MA). Keep a close eye on upcoming earnings calls and any forward‑looking statements about inventory cycles and alternative market exposure, as those will be decisive for the next 4‑8‑week price trajectory.