UBS has identified a significant pullback in semiconductor stocks since June 22, particularly within the AI sector, which may offer attractive entry points for investors. The bank's proprietary HOLT framework highlights several technology stocks that, despite recent declines, show improving fundamentals.
For instance, Micron Technology's stock has dropped about 30% since late June, yet the company reported a substantial revenue increase to $41.46 billion in its fiscal third quarter, driven by investments in technology and multiyear deals, including a partnership with Ford.
Broadcom's shares have only slipped about 5% during this period, with a remarkable 48% year-over-year revenue growth in its second quarter, bolstered by a 143% surge in AI semiconductor revenue. CEO Hock Tan anticipates further growth, projecting a 200% increase in AI semiconductor revenue for Q3.
Advanced Micro Devices (AMD) has also seen a 10% decline since June 22, but UBS remains optimistic about its cash-flow returns, supported by a 57% year-over-year revenue increase in its data center segment. AMD's CEO Lisa Su noted strong customer engagement and anticipated growth from its upcoming Helios AI system, which Microsoft plans to deploy in its Azure data centers.
Overall, the analysis suggests that despite recent market volatility, select semiconductor stocks may offer significant upside potential for investors