Shares of leading semiconductor equipment manufacturers ASML Holding and Applied Materials surged on Friday, January 10, 2026, fueled by a wave of analyst optimism and a broader market rally triggered by expectations of Federal Reserve interest rate cuts.
ASML's stock jumped 6.7% to $1,273.88, with trading volume 8% above its average. The company recently reported Q3 earnings of $6.41 per share, beating estimates of $6.27, though it missed revenue targets with $8.80 billion against an expected $8.99 billion. Analysts from firms including Sanford C. Bernstein and Erste Group Bank have upgraded the stock, resulting in a consensus rating of Moderate Buy and an average price target of $1,270.67. ASML also raised its quarterly dividend to $1.857 per share.
The company's growth is heavily tied to its monopoly on High-NA EUV lithography systems, priced at approximately $380 million each, which are critical for producing next-generation chips. Intel and Samsung have begun adopting this technology for mass production of 2nm and eventually 1nm nodes. While ASML faces headwinds from stricter Dutch and U.S. export controls limiting sales to China—which accounted for over 40% of sales in 2024-2025—demand from Taiwan, the U.S., South Korea, and memory manufacturers like SK Hynix and Micron is expected to offset the decline.
Applied Materials saw a nearly 7% gain, closing at $301.18 and hitting a new 52-week high of $302.78. The rally was part of a sector-wide surge, with the Philadelphia Semiconductor Index rising 2.7% to a record high. Analysts at Cantor Fitzgerald significantly raised their price target from $350 to $425, maintaining an overweight rating, while Goldman Sachs and Mizuho also lifted their targets.
The catalyst for the broader chip sector rally was a weaker-than-expected U.S. jobs report, which increased market expectations for imminent Federal Reserve rate cuts—a scenario typically beneficial for high-growth tech stocks. However, Applied Materials has warned that stricter U.S. export controls are expected to hurt China-related demand and impact its fiscal 2026 revenue. Investors are now awaiting key Consumer Price Index (CPI) data and the company's earnings report in mid-February for further guidance.
