Semiconductor stocks have been devastated in recent weeks, and sure, the painful summer sell-off could be a good time to buy a little cheaper. But with the industry experiencing its biggest drop in nearly two years, it’s hard to predict how far prices will fall.
At the time of writing, the VanEck Semiconductor ETF (NASDAQ:SMH) is down 17.9% from its high. A textbook double top technical pattern has materialized in SMH stock. The decline implied by this pattern may have already begun, but there’s no telling when this half-blooded crash will reverse. It didn’t take long for Wednesday’s relief rally to prove to be nothing more than a dead cat bouncing (sorry, cat lovers!).
If you still want to increase your exposure to AI trading, don’t be put off by the recent weakness. Be prepared to weather the big waves and swim to shore if you do end up losing.
Advanced Micro Devices (AMD)
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Advanced Micro Devices (NASDAQ:Am) has been completely forgotten. The solid numbers helped buoy the entire semi-scene, at least for a day.
Now, AMD stock appears to be succumbing to gravity, with the stock paring back some of its big post-quarter gains. In fact, the good results seem to have come for “free,” with the stock down more than 37% from its all-time high.
Of course, AMD is no Nvidia, but it continues to ride the wave of artificial intelligence.artificial intelligence). Despite the drop in stock price, the business still looks healthy. Investors have ignored the company’s AI chip guidance hike and fled to safe havens, so it might make sense to take AMD stock for granted. Demand for Instinct and Ryzen processors could continue to benefit the company through the second half of the year.
Intel (INTC)
Intel (NASDAQ:International Trade Commission) hit a new 52-week low, but what about the stock? The company posted second-quarter results that fell far short of expectations and announced it would eliminate its dividend in the fourth quarter to conserve cash. In response, shares plummeted nearly 19% in after-hours trading. This follows a 5.5% drop the company suffered in Thursday’s trading.
The bankrupt semiconductor manufacturer is of great concern after failing to meet its significantly lowered forecasts and also announcing massive layoffs of 15,000 employees (more than 15% of its total workforce). As expected, the case for a bullish contrarian buy of INTC stock seems to be weakening with each passing month.
Still, deep value stocks are cheap, and if you still have confidence in management and their cost-cutting efforts, the recent sell-off could be a buying opportunity.
Taiwan Semiconductor (TSM)
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Taiwan Semiconductor (NYSE:TSMC) is a leading semiconductor manufacturer that tends to be a big buy whenever the semiconductor industry experiences a downturn.
After dropping 4.6% on Thursday, TSM shares are now down more than 17% from their peak, roughly matching SMH’s plunge. Unlike many semiconductor stocks that are getting overheated on the back of AI tailwinds, TSM shares actually look quite cheap at 25.9 times forward earnings.
Undoubtedly, geopolitical instability could accelerate if presidential candidate Donald Trump takes office next year. In any case, these concerns are likely overblown and merely an opportunity to add to positions.
With a healthy dividend yield of 1.5%, Taiwan Semiconductor may be a blue-chip stock not to be overlooked amid a bear market in semiconductor stocks.
As of the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author in accordance with InvestorPlace.com’s Publishing Guidelines.
On the date of publication, the editor in charge did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
