Shares of Applied Materials advanced 6.09% to close at $322.51 on Friday, with trading volume exceeding its 50-day average. Despite the rally, the stock remains approximately 6% below its late-January peak of $344.60.
Semiconductor Sector Rides AI Spending Momentum
The move was part of a broad rally in chip stocks, fueled by Amazon's announcement to increase capital expenditures by more than 50% for long-term projects like data centers. Alphabet also signaled higher spending. "Evidence suggests genuine demand for AI products is materializing," noted Ross Mayfield, an investment strategy analyst at Baird. The sector also received a boost from Nvidia CEO Jensen Huang's comments on soaring AI chip demand.
Other equipment makers participated in the rally. Lam Research jumped 8.30%, while Synopsys added 4.01% during the session.
Upcoming Earnings and Macro Calendar
Attention now turns to Applied Materials' fiscal first-quarter results, scheduled for release after the market closes on February 12. According to Refinitiv data, analysts expect earnings of approximately $2.21 per share.
Macroeconomic data could influence trading around the report. The release of the January U.S. jobs report and Consumer Price Index (CPI) has been delayed to February 11 and 13, respectively, due to a recent federal government shutdown. Federal Reserve Vice Chair Philip Jefferson expressed cautious economic optimism on Friday, emphasizing a data-dependent approach with the key rate holding at 3.50%-3.75%.
Geopolitical Headwinds Loom Large
Beyond quarterly results, geopolitical factors present a significant near-term risk. The company has previously warned that tighter U.S. export controls could reduce its fiscal 2026 revenue by an estimated $600 million by impacting its China business. CEO Gary Dickerson has highlighted that when U.S. firms face restrictions, overseas competitors often capture the displaced business.
Investors will scrutinize management's commentary on chipmakers' factory spending plans and any signs of market share shifting to non-U.S. suppliers. A cautious outlook could pressure the stock more severely than a modest earnings miss.
