What is the outlook for AMAT's leading edge customers and their future spending cycles?

Outlook for leading‑edge customers:

Applied Materials’ comment that “leading‑edge customers” are showing weakness signals a near‑term slowdown in spend from the world’s biggest advanced‑node fabs (TSMC, Samsung, Intel). All three are currently wrestling with a combination of excess wafer inventories, softer end‑market demand for high‑performance compute, and tighter macro‑economic conditions. This has pushed them into a “spending pause” after a period of aggressive capacity expansion, especially in China where recent rapid production runs have now been throttled. Consequently, equipment orders for the most advanced processes (N‑5/N‑4) are expected to stay below the growth rates seen in 2022‑23, at least through the next 12‑18 months.

Future spending cycles:

The slowdown is likely cyclical rather than structural. As the current inventory burn‑down completes and new demand drivers—AI accelerators, data‑center upgrades and next‑generation mobile chips—pick up, the same customers will re‑accelerate capex to keep pace with roadmap transitions (e.g., N‑3, N‑2). Historically, advanced‑node spend recovers 6‑9 months after an inventory‑driven dip, so a modest re‑acceleration could be on the horizon in H2‑2025. However, any further macro drag or prolonged Chinese policy constraints would extend the trough.

Trading implications:

The 13 % drop has pushed AMAT into oversold territory (RSI now in the low‑30s) and the price is testing the $115–$118 support band, with a clear resistance near $130. In the short term, the bearish fundamentals justify a cautious short or a “sell‑on‑rally” approach, targeting a retest of the $115 level. On the upside, a clean break above $130 on higher‑than‑expected fab capex guidance would signal a bounce, making a long‑position with a target of $150 (near the 50‑day MA) viable. Keep a close watch on upcoming fab inventory reports, Chinese policy announcements, and the next earnings release—especially any update on the timing of the N‑3/N‑2 equipment pipeline—for the decisive trigger.