Applied Materials shares drop 5% despite record quarter as China concerns overshadow AI boom

Applied Materials just delivered a quarter that most companies would frame and hang on the wall. Record revenue, earnings beats across the board, and a raised full-year outlook powered by what management calls “unprecedented demand” for AI infrastructure. The stock dropped about 5% in premarket trading. The numbers that should have been enough Applied Materials reported fiscal Q3 2026 revenue of $9.12 billion, topping analyst estimates of $8.99 billion by $130 million. Adjusted earnings per share came in at $3.50, beating the consensus forecast of $3.40. More importantly, AMAT raised its full-year 2026 revenue growth outlook for its Semiconductor Systems division. That’s the segment that builds the machines used to manufacture the chips powering everything from data centers to autonomous vehicles. CEO Gary Dickerson pointed to rapid global AI adoption as the primary engine behind the results. Strength showed up across leading-edge foundry-logic equipment, DRAM, and advanced packaging, three categories that sit directly in the path of AI chip production. Why the stock sold off anyway The roughly 5% premarket decline after the August 13 earnings release came down to two factors: Chin...