What Happened?
Shares of chip designer Allegro MicroSystems (NASDAQ:ALGM) jumped 1.5% in the afternoon session after BofA Securities raised its price target on the stock to $39 from $36. The firm kept its "Buy" rating on the shares.
An analyst at the firm noted expectations for modest fourth-quarter beats and first-quarter raises for diversified analog semiconductor stocks. This outlook was driven by ongoing rebounds across most industrial semi-segments, favorable pricing, and strong growth in strategic AI businesses. The price target adjustment represented an 8.33% increase, signaling a positive view of the company's potential performance.
After the initial pop the shares cooled down to $33.50, up 1.6% from previous close.
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What Is The Market Telling Us
Allegro MicroSystems’s shares are extremely volatile and have had 32 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 6 days ago when the stock gained 3.3% on the news that industry giant Taiwan Semiconductor Manufacturing Co. posted stronger-than-expected quarterly results, fueling optimism about sustained demand for artificial intelligence (AI) hardware.
As the world's largest contract chipmaker, TSMC's performance is often seen as a key indicator for the entire tech industry. The company reported record fourth-quarter revenue, surpassing Wall Street estimates, driven by robust demand for advanced chips used in AI applications. This positive report has created a ripple effect across the sector, boosting shares of other semiconductor companies and equipment suppliers like ASML, Nvidia, and AMD. Investors are interpreting TSMC's success and its plans to increase capital spending as a strong signal that the AI-driven upcycle for semiconductors is resilient and likely to continue.
Allegro MicroSystems is up 24.5% since the beginning of the year, but at $33.50 per share, it is still trading 10.7% below its 52-week high of $37.51 from July 2025. Investors who bought $1,000 worth of Allegro MicroSystems’s shares 5 years ago would now be looking at an investment worth $982.43.
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