Allegro Soars 10.47% on Semiconductor Sector Rally: Is This the New AI-Driven Momentum Play?

Summary
• Allegro (ALGM) surges 10.47% intraday, trading at $31.43 amid a broader semiconductor sector upswing.
• Sector leaders like Intel (INTC) rally 1.87%, signaling AI-driven demand for memory and logic chips.
• Options activity intensifies, with $30 and $32.5 call options seeing 425% and 400% price jumps.
• The stock trades above its 200-day moving average of $28.21, hinting at a potential breakout.

Allegro’s explosive intraday move aligns with a sector-wide surge fueled by AI infrastructure demand. With memory prices surging and DRAM demand surging, the stock’s 10.47% gain reflects optimism in AI-driven semiconductor cycles. The rally is further amplified by elevated options trading, particularly in near-term call options, as investors bet on continued momentum.

AI-Driven Memory Demand Fuels Allegro’s Surge
Allegro’s 10.47% intraday rally is directly tied to the semiconductor sector’s AI-driven momentum. Memory prices, particularly for DRAM used in AI data centers, surged 40% in 2025 and are projected to rise further in 2026. This demand is spilling into logic chip manufacturers like Allegro, which benefits from increased production of high-bandwidth memory (HBM) and advanced packaging technologies. The stock’s breakout above its 200-day moving average ($28.21) and Bollinger Bands’ upper boundary ($29.55) suggests a technical confirmation of the bullish trend. Additionally, the sector’s rally—led by TSMC, Samsung, and Micron—has created a self-reinforcing cycle of capacity expansion and pricing power, further boosting investor sentiment.

Semiconductor Sector Rally: Intel Leads as AI Demand Intensifies
The semiconductor sector is experiencing a broad-based rally, with Intel (INTC) up 1.87% intraday. This aligns with the sector’s focus on AI infrastructure, where memory and logic chips are in high demand. Allegro’s 10.47% gain outpaces Intel’s move, reflecting its exposure to high-bandwidth memory (HBM) and advanced packaging technologies critical for AI training. The sector’s momentum is underpinned by capacity expansion plans from TSMC and Samsung, which are expected to benefit Allegro’s supply chain. However, Allegro’s volatility—evidenced by its 10.47% intraday swing from $28.73 to $32.38—highlights its sensitivity to sector-specific risks like supply chain bottlenecks.

Options and ETF Playbook: Capitalizing on Allegro’s AI-Driven Momentum
• MACD: 0.0217 (bullish divergence), Signal Line: -0.0637 (oversold), RSI: 59.13 (neutral), 200D MA: $28.21 (below price), Bollinger Bands: $25.10–$29.55 (price at upper boundary).

Allegro’s technicals suggest a continuation of its AI-driven rally. The stock is trading above its 200-day moving average and Bollinger Bands’ upper boundary, indicating strong short-term momentum. The RSI at 59.13 suggests the stock is not overbought, leaving room for further gains. For options traders, the ALGM20260116C30 and ALGM20260116C32.5 contracts stand out:

• ALGM20260116C30: Call option with $30 strike, 16 Jan 2026 expiry. IV: 60.36% (moderate), Leverage Ratio: 14.81% (high), Delta: 0.6903 (moderate), Theta: -0.1268 (high time decay), Gamma: 0.1072 (high sensitivity).
- Payoff: At a 5% upside ($33.00), payoff = $3.00. This contract offers high leverage and liquidity (turnover: 17,285), making it ideal for aggressive bulls.

• ALGM20260116C32.5: Call option with $32.5 strike, 16 Jan 2026 expiry. IV: 52.35% (moderate), Leverage Ratio: 44.84% (very high), Delta: 0.3733 (moderate), Theta: -0.0909 (high time decay), Gamma: 0.1327 (very high sensitivity).
- Payoff: At a 5% upside ($33.00), payoff = $0.50. This contract’s high gamma and leverage make it a speculative play for those expecting a sharp move above $32.50.

Action: Aggressive bulls should target ALGM20260116C30 for a 5% upside scenario. Conservative traders may use ALGM20260116C32.5 as a high-leverage satellite play. Both contracts benefit from elevated gamma and moderate IV, aligning with the sector’s AI-driven momentum.

Backtest Allegro Stock Performance
The backtest of ALGM's performance after a 10% intraday surge from 2022 to now shows mixed results. While the 10-day win rate is relatively high at 53.25%, the overall return over the same period is only 0.62%, with a maximum return of 3.44% occurring on January 6, 2026. This suggests that while there is some potential for gains, they are not consistently realized, and the strategy's effectiveness is somewhat limited.

Allegro’s AI-Driven Rally: Time to Ride the Semiconductor Super Cycle
Allegro’s 10.47% intraday surge is a microcosm of the semiconductor sector’s AI-driven super cycle. With memory prices surging and DRAM demand set to rise 40% in 2026, the stock’s technicals and options activity signal continued momentum. Investors should monitor the $30.38–$30.80 resistance zone (200D MA range) and the 52-week high of $38.45 for potential breakout targets. Sector leader Intel’s 1.87% gain reinforces the broader trend. Act now: Buy ALGM20260116C30 to capitalize on the AI-driven rally, or short-term traders can scalp the $32.50–$33.00 range with tight stops.