Markets have been a bit chaotic over the last few days. That’s because investors have been rotating out of blistering-hot tech stocks, like Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and other top semiconductor stocks in favor of small-cap stocks.
All on growing confidence the Federal Reserve will cut interest rates by September. In fact, according to the CME Group, there’s now 92.6% odds the central bank will cut rates by at least a half point. In addition, Donald Trump who is now favored to win the November election, has said Taiwan should be paying the U.S.for protection and accused it of stealing our semiconductor business. That also helped to bring down semiconductor stocks.
However, while the rotation is creating plenty of tech turmoil, it’s temporary. If we look at the bigger picture, there’s still substantial opportunity ahead with expansions, earnings, and massive expected spending in artificial intelligence.
For one, according to Grand View Research, the global AI boom could grow from about $137 billion in 2022 to more than $1.81 trillion by 2030. Second, with AI investments only to grow, semiconductor stocks should remain red-hot. Here are three to buy on the dip today.
Nvidia (NVDA)
Crisis has become an opportunity for beaten-down shares of Nvidia. After testing a high of $140, Nvidia stock dropped to about $112.34, where it’s now wildly oversold at its 100-day moving average. It’s also over-extended on RSI, MACD and Williams’ %R. Thus, it could retest $140 from its last traded price of $112.34.
Helping, analysts at Citi just reiterated a buy rating on the stock, with a $150 price target. This comes after Nvidia announced a new service that will boost generative AI for enterprises. Piper Sandler raised its price target to $140, believing the company could beat revenue by $2 billion this quarter. Loop Capital also raised its price target to $175 with a buy rating.
At $112.34, Nvidia is a gift to investors. Longer-term, NVDA could easily run to $200, especially with the artificial intelligence story still growing.
Advanced Micro Devices (AMD)
Market instability has also become an opportunity for oversold shares of Advanced Micro Devices (NASDAQ:AMD).
After testing a high of about $230, AMD is back to $138.55, which represents a significant discount from where it could go. It’s also considered oversold by RSI, MACD and Williams’ %R. As a result, AMD could retest $180 again short term from its last traded price.
Helping, analysts at Roth MKM, Wells Fargo, TD Cowen and Citi have all raised their price targets on the AMD stock. Citi, for example, just raised its price target to $210 from $176, with a buy rating. They expect for second-quarter earnings season to be a strong catalyst for semiconductor stocks.
Even better, AMD’s deal to acquire Silo AI for $665 million should help strengthen its competitive position with Nvidia with regards to data centers and the PC markets. As noted by Roth MKM, the deal should help close the gap with “leading” proprietary AI frameworks, as noted by Seeking Alpha.
Taiwan Semiconductor (TSM)
At $160.28, Taiwan Semiconductor (NYSE:TSM) could be another good deal for investors. That’s because it recently caught support at its 100-day moving average, but it’s also oversold according to RSI, MACD and Williams’ %R. From its last traded price of $153.59, it could refill its bearish gap at around $180 a share.
In addition, TSM earnings have been strong. Its earnings per share of $1.48 beat expectations by six cents. Revenue of $20.82 billion, which was up 32.8% year-over-year, beat by $730 million. The company also raised guidance thanks to explosive demand for AI chips.
In its third quarter, the company expects revenue of $22.4 billion to $23.2 billion on strong smartphone and Aid demand. Fueling even more excitement, Bank of America analysts reiterated a buy rating on the stock with a price target of $180. JPMorgan also reiterated its overweight rating on the TSM stock. As a result, the current crisis has also become a strong buy opportunity for those interested in TSM stock.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.