Applied Materials (NASDAQ:AMAT) shares fell 2.5% in premarket trading on Friday after the semiconductor equipment maker flagged a potential revenue hit from a recently introduced U.S. export control measure.
In a regulatory filing Thursday, the company said the Bureau of Industry and Security’s new affiliate rule would reduce fiscal fourth-quarter sales by approximately $110 million and trim fiscal 2026 revenue by around $600 million.
Analysts at Bernstein explained that the measure “expands end user controls to cover ‘affiliates’ of companies on the entity list … as well as entities 50%+ owned by military end users and other sanctioned parties.” They described the immediate impact as manageable, noting: “For FQ4 $110M is less than 2% of the current $6.7B revenue guide, and ~6% of anticipated China revenues.” Regarding fiscal 2026, they added the effect represents “~2% of current consensus revenue (~$29.1B) and likely mid to HSD % of China sales (assuming a 25-30% mix), and probably ~30 cents or so, ~3% of current consensus EPS at $9.57.”
The analysts characterized the measure as “annoying, but seems fairly incremental, and more of a ‘clean-up’ than anything hugely new,” suggesting it could reduce the need for future updates to the entity list.
Bernstein also highlighted that other U.S. semiconductor equipment makers could face similar challenges, though Applied Materials is the first to quantify the potential impact. “We doubt AMAT will be the only US semicap player impacted here,” the firm noted.
Despite the setback, Bernstein maintained an Outperform rating on Applied Materials with a $195 price target. The analysts pointed out that “prospects for WFE recovery, especially in memory/DRAM … feel like much bigger potential drivers than an incremental shaving of China exposure.”
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