What Happened?
Shares of semiconductor machinery manufacturer Applied Materials (NASDAQ: AMAT) fell 3.4% in the afternoon session following a rally the previous week as geopolitical tensions between the US and China increased over artificial intelligence technology.
The contest over AI entered a more confrontational phase after China ordered Meta to unwind its $2 billion acquisition of the AI startup Manus, citing national security concerns. This move was seen as a direct intervention to limit foreign access to its advanced technology sector. Adding to the friction, the White House accused China of stealing American AI technology on an "industrial scale" and has warned of intensified crackdowns. This struggle over talent, intellectual property, and strategic technologies created significant uncertainty for companies operating in the global AI landscape, as national interests increasingly dictate corporate activity.
Contributing to the weakness was the continued concerns over global supply chain disruptions stemming from the conflict involving the US, Israel, and Iran. The crisis also led to higher raw material costs for a wide variety of industries. This geopolitical instability is raising concerns among investors about potential production delays and increased operational costs for technology hardware companies.
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What Is The Market Telling Us
Applied Materials’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 3.7% on the news that strong earnings results from industry leader Intel and positive industry-wide forecasts boosted the broader semiconductor sector.
Investors were particularly encouraged by a 22% growth in Intel's data center business, suggesting that the AI-driven demand for hardware is finally translating into a significant recovery for central processing units (CPUs) and advanced packaging services. The rally quickly spread across the broader semiconductor sector, lifting peers like AMD, Qualcomm, and ARM by over 10%. This industry-wide lift reflected a growing market consensus that the "AI trade" was broadening beyond Nvidia's specialized graphics chips to the wider silicon ecosystem.
Adding to the positive sentiment, research firm Omdia significantly raised its semiconductor revenue forecast for 2026, citing a surge in demand for memory and data storage components driven by artificial intelligence.
Applied Materials is up 50.2% since the beginning of the year, and at $403.87 per share, it is trading close to its 52-week high of $417.04 from April 2026. Investors who bought $1,000 worth of Applied Materials’s shares 5 years ago would now be looking at an investment worth $2,953.
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