Applied Materials shares tumble 10% after earlier 4% rally

Shares of Applied Materials (NASDAQ:AMAT) rose about 4.1% on Tuesday, hitting a high of $739.67 and closing near $723 as analysts upgraded earnings outlooks, citing AI‑driven semiconductor equipment demand. The rally marked the company's best monthly rally since 1975 and saw the stock added to the Russell Top 50 index.

The next trading day the stock fell roughly 10%, slumping to a low of $639.06 and ending around $651 amid concerns that the rapid price gains may be overbought. Trading volume spiked to over 15 million shares, nearly double the average. The move occurred despite recent earnings that beat estimates, with $2.86 earnings per share on $7.91 billion of revenue for the quarter.

Analysts remain split: many raised price targets to $800‑$850 on expectations of continued AI‑related capex, while others warned the valuation is stretched and a pullback could follow.