Applied Materials Inc. suffered the worst single-day stock decline in five years after giving a disappointing sales and profit forecast, renewing concerns that the US trade dispute with China is weighing on demand.

China is pulling back on purchases of semiconductor manufacturing equipment -- and KLA sells nearly as much stuff to China as Applied does. An earnings warning from Applied Materials just spooked KLA stock investors.

Analysts wonder if China’s recent “overspending” on chip equipment is coming to a halt — and if the company is losing market share to rivals.

The lower guidance prompted a rapid sell-off of Applied Material’s shares, and its stock fell more than 13% in extended trading. Following that decline, the company’s stock is now up just 15% in the year to date, slightly ahead of the S&P 500 Index, which has gained just over 10% so far this year.

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Applied Materials is likely to continue seeing a higher proportion of advanced equipment, fueled by applications like generative AI and the transition

Applied Materials stock price has pulled back from last week’s high of $200 to the current $185. What next for the AMAT shares?

Shares of Applied Materials Inc (NASDAQ: AMAT) tanked despite upbeat fiscal Q3 results. BofA downgraded, Goldman Sachs reiterated buy, Needham kept buy.