Applied Materials Surges 8.2% on TSMC's Bold Capital Spending Plan – Is This the Start of a New Bull Run?

Summary
• TSMC's 2026 capital spending surge sparks 8.2% rally in AMAT
• Analysts raise price targets to $340–$385 amid AI-driven demand
• AMAT trades at 36.7x P/E, near 52-week high of $331

Applied Materials (AMAT) is surging on a historic 8.2% intraday rally, fueled by TSMC's blockbuster capital spending announcement. With the stock trading at $324.18 (up 1.6% from $319.08 close), the move aligns with a broader semiconductor equipment sector rebound. Analysts from Stifel and RBC have upgraded price targets to $340 and $385, respectively, while the stock's 52-week high of $331 looms as a critical technical level.

TSMC's Capital Spending Catalyst Ignites AMAT Rally
The 8.2% intraday surge in Applied Materials stems directly from TSMC's announcement of a 2026 capital spending plan that signals sustained AI-driven chip demand. As TSMC's largest equipment supplier, AMAT stands to benefit from increased orders for deposition and etch tools required for advanced node manufacturing. This catalyzed immediate analyst action, with Stifel raising its price target to $340 and RBC to $385. The move also reflects broader sector optimism, as TSMC's forecast validates long-term growth assumptions for chip equipment manufacturers.

Semiconductor Equipment Sector Rally in Sync with AMAT's Surge
The semiconductor equipment sector is rallying in lockstep with AMAT's surge, led by Lam Research (LRCX) up 2.5% intraday. This synchronized movement underscores the sector's dependence on TSMC's capital allocation decisions. With TSMC representing ~20% of AMAT's revenue, the company's fortunes are inextricably tied to the foundry's spending cycles. The U.S.-Taiwan trade deal's $250B investment pledge further reinforces this sector's strategic importance in reshoring advanced manufacturing.

Options Playbook: Leveraging AMAT's Volatility with Strategic Calls
• RSI: 76.53 (overbought), MACD: 14.88 (bullish), 200D MA: $198.68 (far below)
• Bollinger Bands: Price at $324.18 vs. upper band $320.84 (overbought territory)
• Key support/resistance: 30D $268.09–269.51, 200D $161.53–165.37

AMAT's technicals suggest a continuation pattern with RSI at 76.53 indicating overbought conditions. The 200-day average at $198.68 provides a long-term floor, while Bollinger Bands show price is trading above the upper band. Two options stand out for aggressive positioning:

• AMAT20260123C325 (Call, $325 strike, 1/23 expiry):
- IV: 39.30% (moderate)
- Leverage: 51.29% (high)
- Delta: 0.4567 (moderate sensitivity)
- Theta: -1.1986 (rapid time decay)

• AMAT20260123C330 (Call, $330 strike, 1/23 expiry):
- IV: 42.12% (moderate)
- Leverage: 66.14% (high)
- Delta: 0.3661 (moderate sensitivity)
- Theta: -1.0616 (rapid time decay)Aggressive bulls should consider AMAT20260123C325 into a confirmed break above $330, while AMAT20260123C330 offers high-reward potential for a sustained move toward $340.

Backtest Applied Materials Stock Performance
The backtest of AMAT's performance after a 2% intraday increase from 2022 to the present shows favorable results. The 3-Day win rate is 51.36%, the 10-Day win rate is 56.42%, and the 30-Day win rate is 60.12%, indicating that the stock tends to perform well in the short term following the intraday surge. The maximum return during the backtest period was 5.69%, which occurred on day 58 after the surge, suggesting that there is potential for significant gains if the positive momentum continues.

AMAT at Critical Juncture – Act Now Before Volatility Peaks
Applied Materials stands at a pivotal moment as TSMC's capital spending plan validates its long-term growth trajectory. With RSI at 76.53 and the 52-week high of $331 in sight, the stock is primed for a continuation rally if it clears $330. Sector leader Lam Research (LRCX) up 2.5% reinforces this momentum. Investors should prioritize AMAT20260123C325 for a breakout above $330 or AMAT20260123C330 for a sustained move toward $340. Watch for a breakdown below $315 to trigger profit-taking, but the case for AMAT remains bullish as long as $310 holds.