Shares of Applied Materials Inc. (NASDAQ: AMAT) sold off after its Q3 earnings report, despite the largest quarter-over-quarter revenue gain in company history. In fact, the company shredded analysts’ top- and bottom-line estimates, announced guidance above consensus, and stepped up nearly every major 2026 outlook. And then the stock dropped 6% after hours. Why the drop into such a large beat? Expectations are high for a company like Applied Materials, even after a 10% pullback in the last few weeks. Any potential red flag is immediately noticeable, and in this case, it's the gross margin line that stands out like an NFL lineman at the grocery store checkout.
