Applied Materials (AMAT) Slides Despite EPS Surge and Higher Analyst Estimates

Bristol Gate Capital Partners, an investment management company, published its Q3 2026 investor letter for the "US Equity Strategy". The letter can be downloaded here. The US Equity Strategy lagged the S&P 500 (+2.3%) in Q3 2026, as declines in industrial and semiconductor-equipment holdings weighed against gains in tech. Despite this relative drag, the strategy continued to outpace the index in terms of dividend growth. Portfolio fundamentals were solid in the quarter, with 21 out of 22 holdings exceeding earnings forecasts, six raising guidance, and several boosting dividends. Key contributors included Microsoft, Cintas, and McKesson, while KLA, Applied Materials, and GE Aerospace negatively impacted performance. Bristol Gate's portfolio remains positioned for long-term compounding via robust balance sheets and cash-flow-funded dividend growth, providing resilience against high interest rates, top-heavy market concentration, and AI credit friction. Also, check the Fund's top five holdings to see its best picks for 2026.

In its Q3 2026 investor letter, Bristol US Equity Strategy highlighted Applied Materials, Inc. (NASDAQ:AMAT). Applied Materials, Inc. (NASDAQ:AMAT) provides materials engineering solutions, equipment, services, and software to the semiconductor and related industries. On October 30, 2026, Applied Materials, Inc. (NASDAQ:AMAT) closed at $390.09 per share with a $309.57 billion market capitalization. Despite a 28.06% pullback over the past month, Applied Materials, Inc. (NASDAQ:AMAT) remains up 64.10% over the past year, trading within a 52-week range of $203.40 to $739.67.

Bristol US Equity Strategy stated the following regarding Applied Materials, Inc. (NASDAQ:AMAT) in its Q3 2026 investor letter

"KLA and Applied Materials, Inc. (NASDAQ:AMAT) were the largest detractors, falling 35.3% and 29.2%. KLA beat expectations and raised its view of the 2026 wafer-equipment market to the $150 billion range, while Applied Materials grew adjusted earnings per share 41%, with DRAM revenue, including high-bandwidth memory, up 52%. Analysts raised their earnings estimates for both companies over the quarter, so the declines reflected lower valuations rather than weaker expectations. The strategy benefited from our disciplined rebalancing process, as these names were trimmed at the end of June after having significant gains in the second quarter."

Applied Materials, Inc. (NASDAQ:AMAT) is in 39th position on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 137 hedge fund portfolios held Applied Materials, Inc. (NASDAQ:AMAT) at the end of the second quarter which was 138 in the previous quarter. While we acknowledge the risk and potential of APPLIED MATERIALS, INC. (NASDAQ:AMAT) as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than AMAT that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.

In another article, we discussed Applied Materials, Inc. (NASDAQ:AMAT) and shared a list of top AI stocks in billionaires Ray Dalio and Philippe Laffont's portfolios. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.

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This article is originally published at Insider Monkey.