Things have taken a turn for the worst in the stock market. After a pronounced selloff on Aug. 2, U.S. indices have continued to fall, with the the technology-heavy Nasdaq Composite index and blue-chip Dow Jones Industrial Average each falling more than 1,000 points at one point on Aug. 5.

The benchmark S&P 500 index has dropped 5% since the start of August and the Nasdaq is now in a correction defined as a 10% decline from recent highs.

Overseas, things appear to be even worse. Japan’s Nikkei 225 index fell 12% on Aug. 5 for its worst one-day performance since the Black Monday stock market crash of 1987. It has since rebounded, however.

Leading European indices are down about 5% to begin August. The selloff appears to have been sparked by growing fears that the U.S. economy is entering a recession and that the U.S. Federal Reserve may not be able to cut interest rates fast enough to help matters.

Within this carnage, stocks tied to the artificial intelligence trade appear to be taking the biggest hit, with stocks of microchip and semiconductors being the most bludgeoned.

Leading chip stocks Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) fell 10% at one point on Aug. 5, and those companies’ share prices are each down nearly 18% in the past month. But amid the current selloff, opportunities are sure to emerge.

Here are the three best semiconductor stocks to buy in August 2024.

Nvidia (NVDA)

Following its 10-for-1 stock split in June of this year and subsequent downturn, Nvidia stock is now trading for $100 a share. The stock has declined 50% from its 52-week high of close to $200, including a 20% pullback since the start of July.

More than $500 billion has been erased from Nvidia’s market capitalization since before the stock split occurred less than two months ago.

For investors, the current situation presents a golden opportunity to buy a best-in-class technology stock, and the leading chip stock, at a decent price.

Nvidia stock is now trading more than 40% below the median price target that analysts have on its shares along with a consensus “strong buy” rating. Some rumors have surfaced that Nvidia’s newest Blackwell AI microchip might be delayed, but nothing has been confirmed by the company.

Nvidia next reports financial results on Aug. 28 and they are expected to be another blockbuster print.

Arm Holdings (ARM)

Hit even harder than Nvidia amidst the current selloff has been Arm Holdings (NASDAQ:ARM). The British chipmaker’s stock is down nearly 39% in the last month, including a 20% plunge since the beginning of August.

The selloff in ARM stock has been exacerbated by the company delivering weak forward guidance along with its recent Q2 financial results. The tepid guidance overwhelmed what was otherwise a strong print from the company.

Arm reported Q2 EPS of 40 cents versus 34 cents that had been forecast on Wall Street. Revenue totaled $939 million, which topped consensus estimates of $902.7 million.

Arm’s Q2 sales were up 39% from a year earlier. Management said that the company continues to benefit from strong global demand for its microchips and processors that are used in smartphones and AI applications.

Sadly, Arm maintained its full-year guidance that calls for $1.45 to $1.65 in earnings per share and $3.80 billion to $4.10 billion in revenue.

Analysts had $1.58 in earnings and sales of $4.02 billion penciled in for the company. In addition to its guidance falling short, Arm also said that it is no longer going to report the number of microchips that it ships globally starting in the current third quarter. That news also torpedoed the shares.

However, ARM stock is worth buying on the way down. The company’s share price is still up 85% since its initial public offerin) last September.

Advanced Micro Devices (AMD)

The stock of Advanced Micro Devices (NASDAQ:AMD) took a drubbing both before and immediately after its Q2 financial results were released. However, it’s telling that AMD stock rose 2.50% on Aug. 5, a day when the Nasdaq index fell 3% or more than 500 points.

Investors clearly felt that AMD stock had declined enough and was worth more than where it was trading. Year-to-date, AMD stock is down 3% and ripe for the picking.

AMD’s Q2 print was strong and showed accelerating sales of its AI microchips. The company announced EPS of 69 cents, which topped Wall Street forecasts of 68 cents. Sales in the quarter totaled $5.84 billion, which was ahead of consensus expectations of $5.72 billion.

Owing to the brisk Q2 sales, AMD again raised its projection for sales of its AI chips this year, saying it now expects revenue to exceed $4.50 billion this year. Last fall, AMD forecast 2024 AI chip sales of $2 billion.

On the date of publication, Joel Baglole held a long position in NVDA. 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.