Investors are looking for reasons to be optimistic heading into October. September has been a difficult month for the stock market. Leading indexes fell with the S&P 500 declining by more than 5% overall. This has led to the rise of stocks to buy for October.
October has not been without its issues historically. It is the month in which the greatest number of 1% or larger daily swings occur. Those are simply the trends that investors are contending with.
However, there is reason for optimism and certain stocks will outperform others no matter what happens. Let’s look at a select few firms and stocks that appear to have that potential as we enter October.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) stock has outperformed the market in 2023. Almost every investor is well aware of that fact. It has tripled as of the time this article was written. That said, it has not outperformed the market over the last month, not as I defined performance. The S&P fell by 5% during that period, Meanwhile, NVDA shares fell by 10%.
That said, I remain a fervent believer in Nvidia. The company hasn’t disappointed performance-wise. In fact, it has lived up to the incredible hype of its $11 billion Q2 revenue guidance and then some. $2.5 billion being the ‘then some’ in this case. This makes it one of those stocks to buy.
Investors have to ask themselves what’s behind Nvidia’s price performance of late. The markets are digesting the assumptions around the ‘true’ value of AI at this point. No one knows what that looks like absolutely. All we know is that Nvidia’s chips are the best and most in demand in relation to generative AI. You can judge Nvidia negatively by its P/E ratio but it doesn’t matter because it’s in a class of its own.
AMD (AMD)
AMD (NASDAQ:AMD) is the next obvious stock to choose for investors who believe that the recent AI fear is but a blip in a longer, positive narrative. It’s difficult to argue that idea. AI is almost certainly going to be the biggest change of our lifetime. AMD is the next man up in that story.
I’ve probably stated the idea a dozen times and I’ll probably repeat it a dozen more: AMD is Nvidia’s strongest challenger overall. Its chips are roughly 80% as capable as Nvidia’s for AI applications. In 2023, enterprises have scrambled to secure Nvidia’s chips because they must have the best. There’s certainly a fear that the second-best might not cut it. However, not every ML/AI application requires maximum CPU and GPU processing power. That implies that AMD’s chips may be every bit as utilitarian as Nvidia’s for certain firms but at a cheaper price.
What’s particularly positive about AMD of late is the fact that it has rebounded and shown its resilience in the last days of September. All in all, it’s one of those stocks to buy.
Pfizer (PFE)
Pfizer (NYSE:PFE), like AMD stock, has shown its resilience in late September. It outperformed the market there. That said, it definitely has not outperformed the market in 2023. It has shed roughly 40% of its value while the markets have remained bullish and risen.
I’m going to keep recommending PFE stock for investors with a 12-18 month horizon. Those who can set their capital and forget it over that period are going to see returns. Pfizer’s investing a lot of its Comirnaty windfall into nearly 20 product launches. It’s pharma 101 and I think it’s absurd to think Pfizer is one to count out in that regard.
It’s one of the better pharma firms there is and has been for a long time. Before Comirnaty there was Lipitor, Viagra, and many other commercial successes. Pfizer knows how to make money and a lot of it. It isn’t doing great at the moment but no firm and stock is without its ups and downs. This helps make it one of those stocks to buy.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
