Chip equipment manufacturers surged Thursday after Taiwan Semiconductor Manufacturing Co. unveiled aggressive investment plans. Lam Research jumped 7%, Applied Materials surged 8%, and KLA Corporation climbed 6%. The rally followed TSMC's announcement of a 2026 capital expenditure budget between $52 billion and $56 billion, far exceeding analyst expectations.

TSMC's forecast signals strong confidence in sustained demand for advanced chips, particularly for artificial intelligence applications. The company also projected nearly 30% revenue growth for 2026 and promised capital spending will be "significantly higher" over the next three years compared to the previous three-year period's $101 billion.

The positive outlook rippled across the broader semiconductor sector. NVIDIA and Broadcom gained 1% and 2% respectively, while memory chip makers like Micron Technology and Western Digital also advanced. This collective movement suggests investors are betting on a multi-year expansion cycle driven by AI and high-performance computing needs.