Syeda Seirut Javed
3 min read
On September 1, when a caller mentioned that they purchased Applied Materials, Inc. (NASDAQ:AMAT) shares back in July at $540 before the earnings announcement and again at $490, Mad Money host Jim Cramer remarked:
But you know what? We don’t care where we bought it; we care where it’s going to. Now, this stock is now down 300 bucks from its high. I think if you did initiate a position now, I don’t know when you’re going to do it, you buy a little here. I know you already have some. Forget that you already have some. Think about how to be able to make it so you have a better basis. I would put some on here and then wait till it’s down 10%. It could happen. This is a volatile market.
Powering the Backbone of Microchip Production
Applied Materials, Inc. (NASDAQ:AMAT) occupies a significant spot in the global technology ecosystem by providing the manufacturing gear needed to build advanced logic and memory chips. Semiconductor foundries rely heavily on its deposition, etch, and inspection systems to execute multi-layered architectures. The technical footprint makes the company a major beneficiary of long-term infrastructure upgrades across the industry. For anyone looking at the sector, its manufacturing tools remain quite important to physical chip fabrication.
Cyclical Headwinds and Valuation
Even with incredible technology driving the AI hardware wave, semiconductor capital equipment remains a very cyclical business. When macro conditions shift or fab spending pauses, equipment makers can experience sharp corrections after running up too fast. While the long-term demand for advanced packaging and microchip manufacturing tools looks strong, any unexpected slowdown in customer orders or tighter export constraints can quickly deflate high valuations and leave late buyers holding shares through painful pull-backs.
Institutional Ownership and Market Sentiment
According to Insider Monkey’s database tracking over 1000 elite hedge funds, 137 funds held positions in the company during the second quarter, down slightly from 138 in the previous quarter, showing steady institutional participation. Among those hedge funds, Coatue Management held the most prominent position in the company with over 4.2 million shares. At the same time, short interest stands at 1.50% of the float, indicating limited bearish positioning.
While that institutional backing highlights the company’s fundamental strength, the recent pullback reminds us how quickly volatility can test an investor’s patience. Tying those pieces together, Cramer’s approach offers a practical way forward by letting go of past entry prices, picking up a small slice today, and leaving cash on the sidelines in case the stock drops another ten percent.
