Applied Materials (AMAT) shares crashed nearly 15% on Friday after the semiconductor company reported a strong third quarter but offered disappointing guidance for its fiscal Q4. 

In its earnings release, the industry bellwether attributed its worse-than-expected future outlook to tariffs, which it said were “creating increased uncertainty and lower visibility in near term.”

Applied Materials stock has been in a massive uptrend over the past four months. Despite its post-earnings decline, therefore, it remains well over 30% up versus its year-to-date low set in early April. 

Why Lam Research Is a Better Pick Than Applied Materials Stock

In a post-earnings research note, a senior Bank of America analyst, Vivek Arya, dubbed rival Lam Research (LRCX) a better pick for exposure to chipmaking equipment than AMAT stock. 

Why? Mostly because the former’s portfolio “bias toward high-growth etch/deposition products is skewing foundry/logic share in its favor.”

In comparison, Applied Materials is “exposed to other, potentially sluggish product categories that are weighing on growth,” he told clients in a research note. 

On Friday, Arya downgraded Applied Materials shares to “Neutral” and reduced his price objective to $180. 

Post-Earnings Decline in AMAT Shares May Still be Overdone

Stifel’s analyst Brian Chin also lowered his price objective on AMAT shares to $180 following the earnings release – saying the firm’s revenue won’t grow as steadily in the near-term as management believes. 

According to him, Taiwan Semiconductor (TSM), one of Applied Materials’ key customers and a major chip manufacturer, was more “first-half oriented” in terms of spending, which could hurt growth in H2. 

However, it’s worth noting that that both BofA and Stifel revised their price targets on the Nasdaq-listed firm to $180 – up more than 10% from current levels – suggesting the post-earnings decline, nonetheless, is a bit overdone. 

Plus, a 1.13% dividend yield makes up for another great reasons to own Applied Materials here. 

How Wall Street Recommends Playing Applied Materials

In conclusion, Wall Street hasn’t thrown in the towel on AMAT stock following its Q3 earnings. 

The consensus rating on Applied Materials shares remains at “Moderate Buy” with the mean target of roughly $207 signaling potential upside of some 28% from current levels.