Why Applied Materials (AMAT) Stock Is Trading Up Today

What Happened?

Shares of semiconductor machinery manufacturer Applied Materials (NASDAQ:AMAT) jumped 3.7% in the morning session after the broader semiconductor sector rallied as Advanced Micro Devices (AMD) announced a significant partnership with OpenAI to supply chips for artificial intelligence infrastructure. 

The agreement involved AMD providing multiple generations of its Instinct GPUs to power OpenAI's future systems. AMD noted that this deal was expected to deliver tens of billions of dollars in revenue for the company. As a critical manufacturer of the equipment needed to produce such advanced semiconductors, Applied Materials appeared to have benefited from the positive industry sentiment. The massive scale of the AMD-OpenAI deal signaled a continued, heavy investment in AI hardware, which would likely increase demand for the manufacturing tools and services that Applied Materials offers.

After the initial pop the shares cooled down to $225.38, up 3.6% from previous close.

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What Is The Market Telling Us

Applied Materials’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 4 days ago when the stock gained 3.1% on the news that OpenAI announced partnerships with South Korean firms SK Hynix and Samsung for its ambitious 'Stargate' AI infrastructure project, signaling massive future demand for advanced chips. 

The news sent immediate shockwaves through global markets. In South Korea, shares of SK Hynix jumped 9.9%, while Samsung Electronics rose 3.5%. The optimism spread to Wall Street, where U.S. chipmakers also saw significant gains, with Advanced Micro Devices (AMD) climbing 2.7% and Broadcom advancing 2.5%. This massive investment underscores the insatiable demand for the advanced semiconductors required to power artificial intelligence. The rally reflects growing investor confidence in an AI-driven supercycle for semiconductor growth, positioning the sector's leaders to capitalize on the next technological frontier.

Applied Materials is up 37.5% since the beginning of the year, and at $225.38 per share, has set a new 52-week high. Investors who bought $1,000 worth of Applied Materials’s shares 5 years ago would now be looking at an investment worth $3,731.

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