How the U.S.-China Trade War Benefits Applied Materials Stock (AMAT)

TipRanks

Wed, Apr 16, 2025, 5:08 AM 5 min read

President Trump’s tariffs person overshadowed Applied Materials (AMAT) stock, stirring up short-term headaches for the semiconductor instrumentality titan. Despite a caller rebound, shares commercialized ~30% beneath their 52-week highs, with the diminution somewhat justified. Indeed, higher costs and planetary commercialized tensions could dent the company’s near-term prospects. Still, the effort to reconstruct spot manufacturing to U.S. ungraded promises a lucrative payoff successful the agelong run. Given this communicative and AMAT’s unmatched relation successful spot production, I’m bullish connected the stock.

Even with a 90-day tariff intermission connected semiconductors and electronics announced past Friday, it’s wide that Applied Materials faces choppy waters. The remaining 10% planetary tariff hike volition undoubtedly harm chipmakers similar Intel (INTC) and TSMC (TSM), who beryllium connected imported wafers, gases, and components. This volition compression their budgets, perchance freezing orders for AMAT’s high-end tools.

Take its $20 cardinal etching systems, for instance, oregon its deposition chambers, captious for cutting-edge chips. China’s retaliatory tariffs connected U.S. goods further endanger AMAT’s foothold successful a marketplace that, for context, accounted for 30% of past year’s $26.5 cardinal successful revenue.

The uncertainty is already biting. A azygous delayed fab tin hitch retired $500 cardinal successful AMAT orders, and with Asian chipmakers similar Samsung rethinking enlargement amid tariff chaos, you tin spot wherefore the marketplace mightiness deliberation that AMAT’s multi-billion-dollar backlog risks stalling. And past you person a communicative astir Trump’s looming semiconductor-specific tariffs, which the marketplace expects to deed wrong months. Undoubtedly, they support customers jittery, arsenic they are reluctant to greenlight projects erstwhile costs could spike overnight. It’s similar a waiting crippled wherever hesitation makes much consciousness than action, leaving AMAT to tread cautiously done a murky year.

If AMAT’s outlook wasn’t already wobbly, the company’s proviso concatenation isn’t immune. Tariffs connected niche materials, similar high-purity silicon oregon rare-earth metals, could inflate costs, forcing the institution to either sorb the deed oregon walk it on, risking lawsuit pushback. So, for now, AMAT banal is facing unit connected aggregate fronts.

Despite the imaginable headwinds I conscionable mentioned, investors should support their minds unfastened and see that a bullish lawsuit mightiness beryllium hiding successful the shadows. If Trump’s imagination of a U.S. chipmaking renaissance pans out, maybe, conscionable maybe, Applied Materials could beryllium the aureate goose. Tariffs are designed to lure chipmakers to American soil, and AMAT, the king of deposition and etching tools, is primed to currency in.