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Applied Materials (AMAT) fell 7% for a sixth day as Lam Research and KLA lost 4%, with profit-taking and no WFE forecast hitting AI stocks in chip equipment.
- Applied Materials (AMAT) fell about 7% on Oct. 13 for a sixth straight loss, closing near $461.
- Lam Research (LRCX) and KLA (KLAC) each dropped about 4% as the wider chip index slipped only 1%.
- Applied Materials gave no industry spending forecast at its investor day, which left fab-budget timing unclear.
Lead
Applied Materials (AMAT) shares fell about 7% on Tuesday, Oct. 13, 2026, their sixth consecutive decline. They closed near $461.50 after touching an intraday low of $452.81, a drop of roughly 9% at the worst point. It was the stock's steepest intraday slide since July 28. Lam Research (LRCX) dropped about 4% to $297.04 and KLA (KLAC) fell about 4% to $182.44. The selloff hit the group that supplies the machines behind AI chip production after a year of outsized gains.What Happened to Chip Equipment Stocks?
Chip equipment stocks sold off on Oct. 13 as investors took profits after a strong run and reacted to Applied Materials' investor day.
The move was concentrated in equipment makers. The iShares Semiconductor ETF (SOXX) lost about 1%, and the Invesco QQQ Trust (QQQ) slipped about 0.5%. ASML (ASML) fell about 3% ahead of its earnings report due Wednesday. Applied Materials fell roughly twice as far as any of its peers.
The declines followed large gains. Even after the drop, Applied Materials is up about 80% in 2026, Lam Research about 74% and KLA about 51%. That left the group exposed to selling from investors locking in profits.
Why Did Applied Materials Fall Harder Than Its Peers?
Applied Materials fell harder because it declined to publish a forecast for wafer fabrication equipment (WFE) spending, the industry-wide budget chipmakers set aside for new tools.
Management reiterated a bullish view of AI. CEO Gary Dickerson said demand for computing power would keep expanding rapidly and supporting long-term investment in chip manufacturing. He also pointed to variables that govern near-term pacing, including available factory space, supply-chain constraints and the financing of energy infrastructure.
Those caveats mattered because they put numbers on none of the timing. Without an industry spending benchmark, investors had no yardstick against which to measure management's growth expectations. The gap between strong AI demand and the date a new fab orders its tools is the central uncertainty for the sector.
Strategic Context: A Strong Quarter, a Cautious Backdrop
The selloff did not follow a weak quarter. In its fiscal third quarter, Applied Materials reported adjusted earnings of $3.50 a share, above the $3.39 consensus. It guided fourth-quarter revenue to about $10.25 billion. Management said it expects "another strong growth year" in 2027.
Exposure to China remains a policy risk. The country accounted for 28% of Applied Materials' revenue in the latest quarter, down from 35% in the prior one. That is still more than one-quarter of sales, so export-control changes carry weight for the company and for Lam Research and KLA, which also sell heavily into the market.
The group has been unsettled since September. On Sept. 14, Applied Materials and Lam Research each fell about 6% and ASML about 5% as concerns about the pace of AI spending reached fab budgets. Chip stocks have since swung on questions over how AI buildouts will be funded and on faster progress by Chinese memory maker CXMT.
Why Does Fab Spending Matter for AI Stocks?
Fab spending matters because equipment makers earn revenue only when chipmakers turn AI demand into new factory capacity, which comes later than AI chip orders.
Companies such as Nvidia and the large cloud providers drive headline AI spending. The money reaches Applied Materials, Lam Research and KLA only when foundry and memory makers order deposition, etch and inspection tools for leading-edge logic, DRAM and advanced packaging. Constraints on power, floor space and financing can delay that sequence even when demand holds. The equipment makers' revenue therefore tracks the construction calendar rather than the AI headline cycle.
That delay explains why the group trades on guidance and spending forecasts. A missing industry projection has the same effect as a lowered one for stocks that had risen as much as these had.
What Comes Next for Semiconductor Equipment Shares?
The next catalyst is ASML's earnings report on Wednesday, Oct. 14. ASML is the sole supplier of extreme ultraviolet lithography machines, and its order book offers the clearest read on European and Asian chipmakers' capacity plans. Lam Research and KLA will report in the coming weeks, and both will face questions on the same fab-timing issue.
Two scenarios define the near term. If ASML's bookings and commentary confirm that leading-edge capacity plans are on schedule, the profit-taking may prove a pause within an extended cycle. If the report reinforces concern about financing and the pace of new fabs, the six-day slide in Applied Materials may extend to the rest of the group.
Outlook
Applied Materials' sixth straight decline reflects an expensive group repricing the timing of AI-driven fab spending, not a deterioration in reported results. Lam Research and KLA fell about 4% in sympathy, and all three remain well above their levels at the start of the year. ASML's report on Wednesday is the next test of whether equipment demand is arriving on the schedule the 2026 rally priced in.
Mentioned tickers: AMAT, LRCX, KLAC, ASML, SOXX, QQQ, NVDA
