What Happened?

Shares of semiconductor photomask manufacturer Photronics (NASDAQ: PLAB) jumped 7.1% in the afternoon session after the broader semiconductor sector rallied as chipmaking giant Taiwan Semiconductor Manufacturing Co. (TSMC) reported strong earnings. 

TSMC, a key industry player, announced a 35% year-over-year increase in its fourth-quarter profit, citing continued strong demand for AI chips. The impressive results from the chipmaking giant fueled optimism and ignited a rally across the entire semiconductor industry. This positive sentiment was further bolstered by a market analysis from Omdia, which projected that global semiconductor revenues would surpass $1 trillion in 2026 due to the rapid growth in the AI market.

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What Is The Market Telling Us

Photronics’s shares are very volatile and have had 24 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 7 days ago when the stock dropped 7.6% on the news that a broader market rotation out of the technology sector led to profit-taking following a recent rally. 

The move was part of a wider trend that saw high-growth technology stocks fall, with the Nasdaq experiencing the sharpest decline among the major indices. Multiple reports indicated that traders were locking in profits, particularly from the artificial-intelligence trade, which had previously seen a strong run-up. This market action represented a shift in investor focus, as money moved out of tech. Defense stocks emerged as the primary beneficiary of this capital shift, surging after President Trump proposed a massive $1.5 trillion defense budget for 2027. Major contractors rallied on the news, with Northrop Grumman jumping over 10% and Lockheed Martin gaining nearly 8%, providing a counterbalance to the tech slump that kept the S&P 500 flat. The rotation into heavy industry was further supported by a stabilization in energy markets, as crude prices rebounded.

Photronics is up 2.2% since the beginning of the year, but at $34.16 per share, it is still trading 13.9% below its 52-week high of $39.67 from December 2025. Investors who bought $1,000 worth of Photronics’s shares 5 years ago would now be looking at an investment worth $2,857.

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