Applied Materials Shares Surge 9.64% as TSMC Boosts Capex for AI, Stifel Raises Target to $340

Applied Materials Inc. (AMAT) surged to its highest level so far this month on Jan. 16, with shares climbing 9.64% during intraday trading. The stock closed up 5.69%, marking a significant rebound driven by sector-specific tailwinds and strategic momentum.

The rally followed TSMC’s revised 2026 capital expenditure plans, which now target $52-56 billion—$6-10 billion above prior estimates. Analysts attribute the move to surging demand for AI infrastructure, which is accelerating investments in advanced semiconductor manufacturing. Applied Materials, a key supplier of fabrication tools, stands to benefit as foundries and memory makers expand capacity for high-performance chips. Barclays upgraded AMAT to “overweight” and Stifel raised its price target to $340, citing stronger-than-expected industry spending and AMAT’s leadership in hybrid bonding technology for high-bandwidth memory (HBM).

AMAT’s HBM business, a critical growth lever, reported $1.5 billion in fiscal 2025 revenue, with management targeting a doubling to $3 billion in coming years. The company’s Kinex hybrid bonder, an integrated system for precision packaging, has gained traction with leading clients, enhancing its competitive edge. Analysts highlight that HBM adoption in AI and data center applications is a long-term tailwind, despite near-term challenges from weaker-than-expected FY25 growth.

However, AMAT faces headwinds from U.S. export restrictions, which could cut fiscal 2026 revenue by up to $600 million. While China accounts for a smaller portion of its business compared to peers, tightening licensing rules remain a risk. Investors will also scrutinize AMAT’s Feb. 12 earnings call for updates on regional demand and HBM progress, with the company’s ability to navigate these dynamics shaping its trajectory in the coming months.