New York, Jan 15, 2026, 16:58 EST — After-hours
- Applied Materials climbed 5.7% late Thursday, boosted by a rally in chip-tool stocks following signs of increased foundry spending
- Barclays has upgraded AMAT, and Wells Fargo raised its price target but maintained an Overweight rating
- Attention turns to Feb. 12 earnings, with a close watch on orders, memory demand, and China exposure
Applied Materials, Inc. shares jumped 5.7% to $319.08 in after-hours Thursday, building on a strong rally during the regular session as chipmaking-equipment stocks rallied on new indications of increased spending in 2026.
This shift is significant since investors see toolmakers as a direct indicator of chipmakers’ plans for capacity expansion, particularly for advanced chips powering AI servers. When capital spending spikes, it usually means quicker order growth for deposition and etch equipment—exactly the type Applied manufactures.
Taiwan Semiconductor Manufacturing Co, the industry’s bellwether foundry, sparked the latest surge by raising the bar for upcoming investment. Should that spending materialize, it would ease a major concern for the sector: that customers might hit the brakes after a strong 2025.
TSMC projected Thursday that capital expenditures will hit between $52 billion and $56 billion in 2026. The chipmaker also expects revenue to climb nearly 30% next year, fueled by robust demand for advanced AI chips and expanding U.S. production capacity. (Reuters)
Brokerage notes flooded in. Barclays’ Tom O’Malley bumped Applied up to “Overweight” from “Equal Weight,” raising his price target sharply to $360 from $250. He pointed to “valid concerns” over China exposure that had held the stock back, but highlighted a rebound in DRAM spending—this memory chip segment now makes it “worth owning.” (TipRanks)
Wells Fargo bumped up its price target for Applied from $290 to $350, maintaining its Overweight rating, according to a note cited by MT Newswires. (MarketScreener)
Optimism over tool demand swept the sector fast. ASML, the top chip-equipment maker by market value, surged past $500 billion in capitalization following TSMC’s update. Han Dieperink, CIO at Aureus, said, “the market has underestimated again how large is the demand for AI.” Citi analysts highlighted a bullish outlook stretching into 2027 and beyond. (Reuters)
That said, the picture isn’t straightforward. Applied has flagged that wider U.S. export controls might dent sales connected to clients linked to China. Stricter regulations could also reduce service income and new tool deliveries — a concern if policy shifts or licensing delays occur. (Reuters)
Traders will be keeping an eye on whether the rally is simply pulling demand forward instead of boosting it overall. A spending spike from major customers could falter if memory prices drop or if factory expansions hit snags with permits and construction.
Applied is set to release its fiscal first-quarter results on Feb. 12. Investors will be watching closely for updates on bookings, insights on China, and any shifts in 2026 demand forecasts. (Applied Materials)
