The stock price of Applied Materials dropped 12% on Friday because the chip-equipment manufacturer provided unconvincing sales and earnings projections that were affected by Chinese market weakness and trade policy ambiguities.
The company predicts fourth-quarter revenue between $6.7 billion and $7.2 billion which falls short of the $7.33 billion market expectation. The company’s profit guidance failed to match market expectations. The company’s market value could decline by more than $18 billion if losses persist.
The firm generated 35% of its sales from China during the previous quarter yet new export restrictions from the U.S. have created uncertainty about future demand. The CEO Gary Dickerson predicted that the industry would face extensive consequences because of changing policies.
The stock prices of KLA Corp and Lam Research declined by 5.5% and 4.3% respectively after the announcement. The analysts at JPMorgan believed the weakness might stem from timing issues but Deutsche Bank stated that China’s volatile situation creates major visibility challenges.
