Applied Materials (AMAT) shares surged 5.93% during intraday trading on Tuesday, extending gains after Citigroup placed the semiconductor equipment maker on a 90-day positive catalyst watch list and urged investors to buy the stock following a sharp sector selloff.

The rally was ignited by a Citigroup research note that highlighted the company's upcoming fiscal third-quarter earnings report on August 13, with the bank forecasting revenue and earnings per share to come in approximately 3% and 2% above market consensus, respectively. The bullish call was reinforced by recent target price increases from HSBC, Citigroup, and UBS, now ranging from $683 to $705, implying significant upside from current levels.

Citigroup's broader analysis favored semiconductor equipment stocks over the wider chip industry, citing stronger earnings revisions driven by capital expenditure increases. The positive sentiment lifted the broader sector, with peers such as Lam Research, KLA Corporation, and Teradyne also trading higher during the session.