This Chip Stock Is Cutting 4% of Its Staff Despite 40% YTD Pop. Should You Stay Far Away or Buy Shares Now?

Core Insights - Applied Materials (AMAT) announced a 4% workforce reduction, eliminating approximately 1,444 positions, despite a year-to-date share increase of over 40% [1][2] - The company expects to incur charges of $160 million to $180 million primarily for severance payments [1] - CEO Gary Dickerson highlighted automation, digitalization, and geographic shifts as key factors reshaping workforce requirements [2] Financial Performance - In fiscal Q3 of 2025, AMAT reported record revenue of $7.3 billion, an 8% year-over-year increase, and record adjusted earnings of $2.48 per share [4] - The company projected a $600 million revenue hit for fiscal 2026 due to expanded U.S. export restrictions, which previously caused a 3% decline in AMAT stock [3][4] - Despite guiding for lower fourth-quarter revenue and earnings, management remains confident in achieving its sixth consecutive year of revenue growth in fiscal 2025 at mid-single-digit rates [5] Market Dynamics - The ongoing trade war has impacted AMAT's China business, which remains below 2024 levels but is still significant to overall results [5] - The ICAPS segment, covering mature logic nodes for various applications, continues to face challenges with depressed utilization [5] - The company holds leadership positions in critical technologies, with opportunities to gain market share as these technologies ramp up in 2026 and 2027 [6]