Core Viewpoint - Applied Materials (AMAT) shares experienced a significant decline of 12.71% following conservative guidance for the fourth quarter despite beating expectations in the fiscal third quarter [1][2]. Financial Performance - In the fiscal third quarter, Applied Materials reported revenue of $7.30 billion, an 8% increase year-over-year, and adjusted earnings of $2.48 per share, both exceeding consensus estimates [1]. - The gross margin reached 48.8%, with all three business segments surpassing forecasts [1]. Fourth Quarter Guidance - Management provided a conservative outlook for the fourth quarter, forecasting revenue of approximately $6.70 billion, which is below analysts' average estimate of $7.33 billion [2]. - Adjusted EPS is expected to be $2.11, missing the consensus of $2.39 [2]. Analyst Reactions - The cautious outlook led to multiple analyst downgrades, with Bank of America lowering its rating to Neutral from Buy and reducing the price target to $180, citing weak visibility around demand and pressures related to China [3]. - Summit Insights downgraded the stock to Hold from Buy, highlighting risks from U.S. export restrictions affecting orders in China, potentially leading to excess capacity [3]. - Stifel maintained a Buy rating but cut its price target to $180 from $195, indicating that while long-term fundamentals are sound, near-term guidance necessitates a more conservative valuation [4]. - Goldman Sachs reaffirmed a Buy rating with a target of $215, emphasizing that despite a soft near-term outlook, Applied Materials benefits from strong fundamentals and positioning in etch and deposition technologies [5]. - Barclays also maintained an Equal Weight rating with a target of $170 [5].

Core Viewpoint - Nvidia is facing significant challenges due to U.S. export restrictions, prompting the company to develop a lower-priced AI chip specifically for the Chinese market to regain lost market share [3][4][6]. Group 1: Market Impact - Nvidia's market share in China has plummeted from 95% before 2022 to 50% due to U.S. export restrictions [8]. - The company has seen a direct financial impact, with a write-off of $5.5 billion in inventory and a loss of $15 billion in potential sales due to the H20 chip ban [10]. Group 2: New Chip Development - The new AI chip, priced between $6,500 and $8,000, is based on the RTX Pro 6000D and utilizes traditional GDDR7 memory, avoiding advanced packaging technologies from TSMC [4][5]. - Nvidia plans to start mass production of this new chip in June and aims to release another chip in September, indicating a strategic push to recover market presence [5]. Group 3: Strategic Adjustments - Nvidia has previously customized GPUs for the Chinese market twice, and this new chip marks the third attempt to adapt to the changing regulatory environment [7]. - The CEO of Nvidia, Jensen Huang, has expressed concerns that continued U.S. restrictions may drive more Chinese customers to seek domestic alternatives [9].