Applied Materials, Inc. (AMAT) Stock: Gains Almost 4% Amid $180M Restructuring Charge and Layoffs

TLDRs;

• Applied Materials will cut about 1,400 jobs, representing under 4% of its global workforce.
• The company expects up to $180 million in restructuring costs tied to severance and terminations.
• Shares gained nearly 4% despite the layoffs, reflecting investor optimism around long-term automation goals.
• New U.S. export restrictions could wipe $600 million off fiscal 2026 revenue, pressuring future margins.

Applied Materials, Inc. (NASDAQ: AMAT) stock gained nearly 4% on Thursday even as the company announced plans to cut roughly 1,400 positions worldwide, a move tied to automation, digitalization, and evolving global operations.

The U.S.-based semiconductor equipment manufacturer said the layoffs represent less than 4% of its 36,100-strong workforce as of August 2025.

The restructuring, disclosed in an October 24 filing, aims to streamline operations amid new export restrictions and shifting demand across global chip markets. Despite the job cuts, investors appeared confident in the company’s long-term digital transformation strategy, lifting the stock to close at $228.47, up 3.59% for the day.

Global Workforce Cut by 1,400

Applied Materials’ decision will affect employees across all regions and levels, marking one of the company’s most significant organizational shifts in recent years.

Severance and related termination expenses are expected to total between $160 million and $180 million, a one-time charge that will likely be recognized in the fourth quarter of fiscal 2025.

While the reduction may appear modest, accounting for less than 1% of annual revenue, it signals an ongoing adjustment to the realities of an increasingly automated semiconductor industry. Analysts suggest the layoffs are more about positioning than cost-saving, as the company has yet to disclose annualized savings from the move.

Automation and Digitalization Drive Strategy

In its filing, Applied Materials cited “automation, digitalization, and geographic shifts” as key motivators behind the restructuring. This aligns with the firm’s broader goal of integrating AI-driven technologies into chip manufacturing and supply chain processes.

The company has recently deepened collaborations with major chip producers, including GlobalFoundries, focusing on AI-powered photonics manufacturing, a cutting-edge process that uses light to optimize production efficiency.

Observers believe these automation initiatives could open new business opportunities for software vendors specializing in workflow optimization, digital twins, and semiconductor process automation.

Facing $600M Revenue Hit

The restructuring announcement comes as Applied Materials braces for a projected $600 million revenue hit in fiscal 2026 due to new U.S. export restrictions, which limit sales of advanced chip equipment to certain regions, including China.

Analysts view the cost cuts as a preemptive defense against these headwinds, designed to protect margins amid tightening global controls. However, with no clear breakdown of expected ongoing savings, questions remain about whether the restructuring will meaningfully offset the forecasted revenue decline.

Market Reaction Remains Upbeat

Despite looming challenges, investors responded positively to the company’s strategic reset. Applied Materials’ stock climbed nearly 4%, signaling confidence that automation and digital transformation efforts will yield long-term efficiency gains.

“Investors appear to be focusing on the company’s proactive approach rather than short-term pain,” said one market strategist. “Applied’s move to digitize its workflows could enhance its competitiveness in the next wave of chip equipment demand.”

The upbeat sentiment follows a brief dip earlier this month when shares fell 3% in extended trading after a lower revenue forecast. Thursday’s rebound suggests the market sees the restructuring as part of a broader pivot toward a more tech-driven operational model, one that could pay off as the semiconductor sector recalibrates for an AI-driven future.

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