We’re Building Up Our Semi Cap Exposure With This Buy
We continue to see chip capacity tightness ahead, creating an even bigger industry pain point.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
| AMAT | Buy | 62 | 427.10 | 513 | 3.6 |
After you receive this alert, the Pro Portfolio will buy 62 shares of Applied Materials (AMAT) at or near $427. Following the trade we will own 513 AMAT shares, accounting for roughly 3.6% of the Pro Portfolio’s assets.
A number of factors are leading us to put our money where our mouth is on One-rated Applied Materials. These include the robust multi-year outlook issued by Applied earlier this week as well as the one from AMSL Holding (ASML). We will also include the reading between the lines that we did earlier today regarding Taiwan Semi’s (TSM) Q3 2026 results and guidance and the sharp drop in Q3 2026 smartphone shipment volume reported by IDC.
We will also lump in recent 2027 revenue comments from Nvidia (NVDA) and Advanced Micro Devices (AMD) that called for a significant year-over-year ramp despite being capacity constrained. To us that indicates industry tightness is going to become even more so, and that means capacity will likely increase further toward AI and data center.
This all points to robust AI and data center chip strength but also the continued pain point of tight chip capacity. Indeed, it’s that same tightness that has prompted both ASML and Applied to move forward with another round of price hikes, which, in our view, should be beneficial to margins and EPS expectations in 2027 and beyond.
TSM also reiterated its 2026 capital spending plans for this year, which calls for a more than 50% year-over-year increase. Yesterday, Global Foundries (GFS) announced plans to open two semiconductor fabrication plants in Malta, New York, supported by up to $21 billion in financing from Japan. The first plant is scheduled to open in 2029 with a price tag of around $10 billion. Whether or not those plants by Global Foundries were included in Applied’s global fab project comments earlier this week, we don’t know, but it reaffirms the view that capacity is extremely tight.
In our view, chip capacity is poised to remain tight for some time, especially as agentic AI adoption and usage increases, global internet usage rises further, we have more connected devices consuming and creating data, and over time autonomous driving, robotics and other emerging applications kick in.
Those factors also keep us bullish on the Portfolio’s chip positions, and much like our move today with Applied, we aren’t just sitting by. We’re examining compelling risk-to-reward entry points for the Pro Portfolio. More to come on that front.
As we make this AMAT move today, we reiterate our One rating and reset our checkpoint price level to $375.
If you missed Bob Lang’s technical review of AMAT shares out earlier today, you can find it here.
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(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade’s executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long AMAT.
