Applied Materials stock rebounds 5.5% as chip sector recovers from AI regulation fears

Applied Materials shares rebounded 5.5% in morning trading Friday, recovering from Thursday's sharp decline driven by fears of stricter AI regulation and semiconductor export controls following the Democratic election sweep. No new company-specific negative news emerged overnight, prompting investors to view the drop as an overreaction to political risks. The rebound spread across the semiconductor sector, with peers like AMD, Nvidia, Intel, Micron, and Broadcom also rising. Morgan Stanley's price target cut to $538 was overshadowed by the sector-wide recovery. The Nasdaq attempted to stabilize after Thursday's correction, supported by a jobs report showing 165,000 new positions. The Philadelphia Semiconductor Index rebounded about 4% after its worst one-day drop since 2020. Investors are positioning ahead of Applied Materials' Q4 FY2026 earnings on November 12, with expected revenue of approximately $10.25 billion.