NEW YORK, December 30, 2025, 15:20 ET — Regular session
- Applied Materials shares were down about 1% in afternoon trading, lagging a mostly flat semiconductor ETF.
- A Reuters report said China is requiring chipmakers adding capacity to source at least 50% of equipment domestically.
- Wells Fargo lifted its price target on AMAT to $290 and kept an Overweight rating, TheFly reported.
Applied Materials, Inc. (AMAT.O) shares slipped on Tuesday, with investors weighing fresh signs of tougher competition in China for semiconductor equipment makers. The stock was down 1.1% at $260.27 in mid-afternoon New York trade.
The stock drew attention after Reuters reported China is requiring chipmakers seeking approval to build or expand fabs to use at least 50% domestically made equipment when adding new capacity. The measure is not publicly documented and is enforced through procurement tenders, people familiar with the matter told Reuters, and authorities can relax the threshold where local tools are not yet available. 1
That adds to a fraught outlook for toolmakers selling into China, a major manufacturing hub even as U.S. export controls tightened. Applied said in November that China’s share of its revenue had slipped to the mid-20% range from nearly 40% in recent years, and it expected chipmaking-equipment spending in China to fall in 2026 as tighter U.S. export controls limit market access. 2
U.S.-listed chip-equipment peers were also lower. Lam Research (LRCX.O) and KLA (KLAC.O) were down about 1%, while ASML (ASML.O) rose about 0.7%; the iShares Semiconductor ETF (SOXX.O) was little changed.
Wells Fargo raised its price target on Applied Materials to $290 from $255 and kept an Overweight rating, TheFly reported. A price target is an analyst’s estimate of where a stock could trade, while “Overweight” signals an expectation the shares will outperform peers. Wells said Applied still trades at a discount to peers and is positioned for 2026 “WFE” outperformance — shorthand for wafer fab equipment, the machinery used to make chips. 3
The broader tape was quiet in holiday-thin trading, with technology and financial shares weighing on major indexes. “It’s just a healthy rebalancing of allocations more so than an emotionally driven sell-off (in tech),” said Mark Hackett, chief market strategist at Nationwide. Investors also parsed minutes from the Federal Reserve’s December meeting, with the next policy meeting on Jan. 27-28. 4
Chip-equipment stocks can trade like a mix of growth and cycle plays: they benefit from investment waves, but rate expectations can sway valuations. Shifts in yields and policy outlook tend to show up quickly in the sector’s multiples.
China’s domestic-equipment push also raises the risk that orders migrate to local suppliers, particularly for less-advanced production lines. Even where foreign tools remain hard to replace, tougher procurement requirements can slow purchasing decisions and intensify price pressure.
Applied Materials sells tools used to deposit, etch and inspect layers on silicon wafers, as well as equipment for packaging chips. Demand is tied to how much chipmakers spend on building capacity and upgrading factories.
Traders are now watching for any official clarification from Beijing on how the domestic-equipment threshold is applied and whether it expands beyond new capacity adds. TipRanks lists Feb. 12, 2026 as Applied’s next earnings report date, after the close, when investors expect management to address demand and guidance. 5
With only a handful of sessions left in the year, liquidity remains thin and policy headlines can move the group quickly. That leaves chip-tool stocks prone to sharp swings even on limited company-specific news.
For Applied, the near-term debate is whether optimism around 2026 spending can offset a China backdrop that keeps the sector headline-driven. The shares were last down about 1% on the day.
