Bear of the Day: Entegris (ENTG)

Semiconductor-related stocks have taken the brunt of the pullback in correlation with AI bubble fears, and Entegris ENTG has been one to avoid in particular.

Providing materials management solutions for microelectronic and semiconductor producers, the valuation for ENTG has become more reasonable, but the trend of declining earnings estimate revisions suggests more downside risk as Entegris deals with industry-related headwinds that are specific to its operations.  

Correlating with such, Entegris stock has dropped 20% this month and currently lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.

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Entegris’ Cautious Outlook

The extended selloff in ENTG comes as Entegris issued somewhat weak revenue guidance for Q4 that came short of analyst expectations and suggests up to a 5% sequential decrease from the $807.1 million the company brought in last quarter.

Although Q4 revenue targets still call for double-digit growth from a year ago, Entegris has grappled with margin compression due to tariffs and weaker U.S. sales to China.

CoreWeave’s Data Center Delay

Adding to geopolitical trade tensions that are impacting Entegris’ outlook is that industry-wide pressures have mounted after AI cloud provider CoreWeave CRWV recently announced a data center delay that triggered concerns across the semiconductor supply chain.

As a materials provider, Entegris has been caught in the downturn along with other companies in the semiconductor ecosystem, such as Arm Holdings ARM, Micron Technology MU, and Lam Research LRCX.

Declining EPS Revisions

Unfortunately, the short-term volatility in Entegris stock is likely to persist as fiscal 2025 and FY26 EPS estimates have dropped 3% and 8% in the last 30 days, respectively. 

On top of this, its top and bottom line growth prospects aren’t as spectacular in terms of the expansion potential for the broader AI trade. 

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Bottom Line

With its stock falling 35% from a 52-week high of $112 a share, the short-term headwinds that Entegris may continue to face are unfortunately a reason why some AI bubble fears are realistic, especially for companies that aren’t direct developers of the technology.   

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This article originally published on Zacks Investment Research (zacks.com).

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