With stock market volatility returning for the hottest days of summer, investors may be pondering whether it’s too late to rotate into some of the still-cheap growth stocks. Especially those that didn’t really participate in the first-half market rally.
The mid-cap surge came fast and furiously. Though the cap rotation may still have a ways to go, the easy money, as they say, has likely already been made.
In any case, staying diversified is key to steering clear of ugly sector and theme-specific sell-offs. The Nasdaq took an amplified hit on Wednesday, with most of the damage concentrated in the semiconductor scene. Indeed, those who refused to take profits in such hot plays should have seen brutally volatile days like Wednesday coming.
Though battered, the semiconductor industry may still offer terrific long-term buying opportunities and growth stocks. Particularly for investors who are ready to roll with the punches. Here are three growth stocks to consider buying after the July pummeling.
Nvidia (NVDA)
Whenever Nvidia (NASDAQ:NVDA) shares give you a chance to buy on the dip, you may wish to consider taking it. Undoubtedly, buying NVDA stock on weakness has been met with handsome rewards. And, though this time may very well feel different, the company’s dominance and leading position in the AI race remain reasons to consider braving any extreme drawdowns.
On such a brutal single-day decline for semis, I found it somewhat surprising that NVDA stock wasn’t down by double-digits. After all, it has been one the hottest stocks on the market. And with that, it should have the most room to fall once momentum swings the other way.
No doubt, a 6.6% single-day decline is undoubtedly painful for Nvidia stockholders. However, the damage done was less than your average semi-stock. And, a heck of a lot less than its top rival, Advanced Micro Devices (NASDAQ:AMD), which sank 10.2% on the day.
Lam Research (LRCX)
Lam Research (NASDAQ:LRCX) is a semiconductor equipment maker primed to gain as AI chip spending continues. But with an expanded multiple and very sharp gains put in since June, LRCX stock seemed overdue for another one of its corrections. After shedding 10% in a single day, it only took one day for shares to return to correction territory for the second time this year.
Though the latest correction is the most painful yet, the dip below $1,000 per share seems more like a buying opportunity than anything else.
Of course, geopolitical unrest around Taiwan is unsettling for Lam Research shareholders. Particularly given how much business it does with foundry giant Taiwan Semiconductor (NYSE:TSM). However, I view the concerns of geopolitical uncertainties as overdone. The stock looks incredibly cheap at 35.5 times trailing price-to-earnings (P/E), especially given its critical role in the global semi market.
ASML (AMSL)
ASML (NASDAQ:ASML) is another semiconductor equipment maker that found itself under pressure on Wednesday. On a turbulent day for semis, ASML stock shed nearly 13% of its value.
Despite leading semis and the broader tech sector lower on the day, I don’t view ASML’s growth narrative as significantly changed. ASML is still the powerhouse it was before, and the firms it serves are still capitalizing on the AI boom. Further, ASML still has a virtual monopoly when it comes to the types of machines it makes.
Though Taiwan Semiconductor is a huge customer for ASML, I wouldn’t be so quick to rule out a surge in ASML equipment orders from the foundry giant. Indeed, after the latest plunge, the name seems notably less risky despite uncertainties surrounding Taiwan.
On 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 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.
