3 Top-Rated Chip Stocks to Buy in the Wake of a Major Selloff
- Finance
ThePostMaster- 0
- 8 minutes read
Semiconductor stocks have a reputation for being the most expensive in town, but that’s not really the case. The past several months have tested investor resolve, with many chip stocks experiencing sharp corrections that have erased gains and left portfolios bruised.
That said, this has created the very conditions that produce outsized returns.
When broad-based selling hits a sector as structurally important as semiconductors, it rarely discriminates between the fundamentally broken and the merely misunderstood. You can buy large-cap stocks like Nvidia (NVDA) or Broadcom (AVGO), but smaller companies with strong operational foundations are also worth having exposure to. More interest rate cuts are expected later this year, and that should help these small caps out.
Here are three top-rated chip stocks to look into that are more agile and have more growth potential. Do note that buying these stocks naturally includes taking on more risk, as they have smaller market caps than the aforementioned chipmaking juggernauts.
Atomera (ATOM) is a semiconductor materials and intellectual property licensing company. It does not build fabs or produce finished semiconductors. The company re-engineers silicon substrates, and this is what they call a “quantum engineered superlattice.” The modification allows performance gains and cost advantages.
It could allow better DRAM and SRAM, and since the memory market is quite hot, the demand could cause the stock to rebound.
If you look at the addressable market, the bull case gets quite compelling. ATOM’s market cap is just $81 million at the moment. Since the company licenses IP and is not involved in chip manufacturing, revenues have high margins and flow almost directly to the bottom line. The problem is, there’s no meaningful revenue yet.
If even one major foundry moves MST into high-volume manufacturing and begins paying royalties, the revenue shift from near-zero to tens of millions would be seismic relative to the current valuation.
The average price target of $5 implies the stock could double from here.
