Why Applied Materials Stock Pulled Back on Friday

Shares of semiconductor company Applied Materials (NASDAQ: AMAT) pulled back on Friday after the company reported financial results for its fiscal first quarter of 2025. As of 2:15 p.m. ET, Applied Materials stock was down 6% and is now down more than 30% from its high.

Guidance came in lighter than expected

Applied Materials' equipment enables semiconductor manufacturing. And in Q1, the company's revenue of $7.17 billion hit management's guidance square on the nose. Moreover, its Q1 adjusted earnings per share (EPS) were ahead of guidance, growing 12% year over year to $2.38. So there weren't really any problems in the Q1 numbers.

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For the upcoming second quarter, Applied Materials expects revenue of $7.1 billion. While that would be up on a year-over-year basis, investors had hoped for more. There isn't a demand problem but rather an export problem. New trade restrictions represent a $400 million headwind for fiscal 2025, with half of this coming in the second quarter, according to management.

In other words, investors are resizing the opportunity with Applied Materials stock based on real changes in macroeconomic conditions.

This could be a buying opportunity

Applied Materials is an important company in the semiconductor space. Generally speaking, it's hard to see long-term demand going anywhere but up. Historically, the stock price has pulled back just prior to stagnation in revenue growth and profits -- given the complexities of the changing landscape in 2025, that could be what we're seeing here.

This does present a headwind. But Applied Materials can push past the headwind over the long haul, thanks to its position in a resilient and growing space. Therefore, this stock could be worth buying in the coming year, especially as the valuation becomes more attractive. But investors will need to take a long-term view and look past a potentially bumpy ride.

Should you invest $1,000 in Applied Materials right now?

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Applied Materials. The Motley Fool has a disclosure policy.