Key Takeaways
- As many chip stocks fall on worries about tougher trade restrictions and geopolitical tensions, analysts suggested fears may be overblown, offering investors an opportunity to “buy the dip.”
- Wedbush and Jefferies analysts dismissed recent political rhetoric as “noise” in the chip companies’ artificial intelligence (AI) story with limited impact.
- Bank of America analysts said the recent volatility could present an “enhanced opportunity” to buy shares of companies like AI darling Nvidia.
- UBS analysts noted the semiconductor sector can be prone to volatility, especially in an election year, and recommended that investors focus on the long-term value of AI exposure.
As many chip stocks fall on worries about tougher trade restrictions and geopolitical tensions, analysts indicated fears may be overblown, offering an opportunity for investors to “buy the dip,” citing potential growth from surging artificial intelligence (AI) demand.
Shares of chipmakers Advanced Micro Devices (AMD), Qualcomm (QCOM), TSMC (TSM), and others were lower, while AI darling Nvidia (NVDA) wavered between gains and losses in intraday trading Thursday after Wednesday’s sell-off.
‘Noise’ in the AI Bull Thesis
Concerns that geopolitical tensions could bring tech stocks’ AI-fueled growth to a halt are unlikely to “move the needle,” according to Wedbush analysts.
“The political rhetoric during this political climate and Beltway races will be loud but ultimately just like our view since 2016 the bark will be way worse than the bite on the US/China Cold Tech War fears,” the analysts wrote.
Jefferies analysts also dismissed geopolitical worries as more “noise” than substance, with limited impact, adding they viewed “crowded positions and investors’ worry about AI’s ROI” as more likely sources of concern.
An Opportunity To ‘Buy the Dip?’
Bank of America analysts said they “see current volatility as enhanced opportunity in companies with best-profitability,” pointing to Nvidia among others.
Wedbush analysts also remained steadfast in their bullish view of the AI play, saying they see tech stocks going higher in the second half of 2024 into 2025, adding that they believe upcoming second-quarter earnings will be “a major positive catalyst for the tech sector.”
UBS analysts noted that the semiconductor sector can be prone to volatility, especially during an election year in the U.S., and said they “recommend focusing on building long-term exposure to AI, which we expect to be a key driver of equity returns in the coming years.”