Applied Materials rises on AI chip demand confidence

Columbia Seligman Global Technology Fund released its Q2 2026 investor letter, highlighting Applied Materials (AMAT) as a key position benefiting from the AI-driven semiconductor cycle. During the quarter, the fund's Institutional Class shares returned 50.34%, outperforming the MSCI World Information Technology Index's 33.65% gain. Technology stocks rallied broadly as concerns over the Iran conflict eased and AI infrastructure spending drove demand for semiconductors, memory, networking, servers, and power solutions.

Applied Materials, which provides materials engineering solutions, equipment, services, and software to the semiconductor and related industries, saw its share price rise during the quarter. The fund noted that AMAT operates in a similar space to Lam Research and held an overweight position in the stock. The catalyst for the price rise was growing investor confidence that AI-driven semiconductor demand would support sustained wafer fabrication equipment spending, specifically in leading-edge logic and advanced packaging.

The company's fundamentals backed this confidence. In Q2 fiscal 2026, AMAT reported record revenue of $7.91 billion（約1.3兆円）, representing growth of 13% sequentially and 11% year-over-year. On July 27, 2026, AMAT closed at $516.89 per share. Notably, the stock experienced significant volatility: it fell 28.51% over the one-month period preceding that date, yet gained 174.34% over the preceding 52 weeks, reflecting both near-term uncertainty and longer-term AI-driven momentum. The company's market capitalization stood at approximately $410.39 billion（約66兆円）.

Institutional adoption of AMAT has also accelerated. According to hedge fund tracking data, 138 hedge fund portfolios held AMAT at the end of Q1 2026, up from 111 in the prior quarter. The fund expects AI and data-centre investment to remain strong, supported by broadening earnings growth and improving software bookings, cloud consumption, and customer spending. However, the fund acknowledged risks, cautioning that geopolitical uncertainty, higher interest rates, and heavy AI investment could pressure valuations and free cash flow.

Applied Materials' Q2 2026 performance reflects a broader rally in semiconductor stocks driven by confidence in AI infrastructure spending. The fund's statement that AMAT's share price rose as investor confidence in AI-driven demand for wafer fabrication equipment grew captures a key market shift: the recognition that chip manufacturing capacity is now a critical constraint in the AI deployment cycle. The company's record $7.91 billion（約1.3兆円） quarterly revenue, combined with 13% sequential growth, demonstrates that this confidence is grounded in real demand signals.

Columbia Seligman Global Technology Fund's outlook for sustained AI and data-centre investment provides the backdrop for AMAT's appeal. The fund cites broadening earnings growth, improving software bookings, cloud consumption, and customer spending as tailwinds that should keep capital flowing into semiconductor infrastructure. However, the fund also flags material risks: geopolitical uncertainty, higher interest rates, and heavy AI investment could pressure both valuations and free cash flow—a note of caution that tempers the bullish case despite AMAT's strong recent momentum.

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