Shares of Applied Materials rallied sharply on Friday, February 15, 2026, after the semiconductor equipment leader projected financial results that exceeded Wall Street expectations. The company's bullish outlook, driven by artificial intelligence demand, provided a lift to chip-gear names during a holiday-shortened trading week.
Applied Materials closed the session up 8.0%, a significant move that helped steady the broader semiconductor sector. The iShares Semiconductor ETF (SOXX) advanced 0.9%, while the VanEck Semiconductor ETF (SMH) gained 0.4%. Other equipment manufacturers followed suit: Lam Research climbed 1.8%, and KLA added 0.9%.
However, the sector's performance was mixed. Notable AI chip leaders Nvidia and Broadcom both finished in negative territory, declining 2.2% and 1.8%, respectively. This divergence highlights investor focus on where AI-related capital expenditures are flowing within the complex chip supply chain. Market participants are scrutinizing actual equipment orders for data centers versus broader corporate spending plans.
Applied Materials, the largest U.S. supplier of chipmaking tools, provided a second-quarter revenue forecast of approximately $7.65 billion, plus or minus $500 million. It also projected adjusted earnings of about $2.64 per share, give or take $0.20. Both figures surpassed consensus analyst estimates, according to LSEG data. Chief Executive Gary Dickerson attributed the strength to "the acceleration of industry investments in AI computing." Morningstar analyst William Kerwin echoed this sentiment, predicting a major growth cycle for wafer fabrication equipment over the next three years. A critical enabler is high-bandwidth memory (HBM), a stacked DRAM technology used alongside AI processors that requires advanced packaging tools.
Macroeconomic data provided a supportive backdrop. The January U.S. Consumer Price Index showed a modest 0.2% monthly increase, bringing the annual rate to 2.4%. Core CPI, which excludes volatile food and energy prices, rose 0.3% for the month and 2.5% year-over-year. "For the Fed, this probably doesn't change much in the near term," commented James McCann, senior economist for investment strategy at Edward Jones. The softer inflation reading eased some pressure on growth-oriented stocks, including semiconductors.
Despite this, major equity indices struggled for direction. The S&P 500 eked out a 0.05% gain, while the Nasdaq Composite slipped 0.22%. Michael James, managing director at Rosenblatt Securities, noted that large-cap technology stocks continued to act as an anchor on the market, with traders exhibiting caution ahead of the Presidents Day holiday on Monday, February 18.
Chip stocks remain a primary vehicle for traders positioning around the AI investment theme, leading to pronounced volatility. "It's all this whack-a-mole game of trying to figure out what AI is going to destroy next," said Art Hogan, chief market strategist at B Riley Wealth, in a recent commentary.
The key question for semiconductor investors is whether the rally in equipment stocks will broaden to the rest of the sector or lose momentum after the holiday. Risks are elevated due to high expectations; any slowdown in AI spending, margin compression, or delays in new manufacturing capacity could prompt a swift sector pullback.
Attention now turns to upcoming catalysts. Analog Devices is scheduled to report earnings before the market opens on Wednesday, February 18, with a conference call at 10:00 a.m. ET. Its results may offer insights into industrial and non-AI demand trends. Macro traders are awaiting the Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation gauge, due on February 20.
The most significant test for chip stocks arrives the following week. Nvidia is set to release its quarterly results after the market closes on Wednesday, February 25, an event that historically moves the entire semiconductor complex.
