Chipmakers sold off on Tuesday following Nvidia’s (NVDA) nearly 2% drop, which rattled confidence across the sector and pushed the Philadelphia Semiconductor Index (SOX) down about 1%. Advanced Micro Devices (AMD) slipped, while equipment makers Lam Research (LRCX) and KLA Corp. (KLAC) each lost around 3%. Broadcom (AVGO) and Marvell Technology (MRVL) managed to edge higher by the closing hours, though overall sentiment in the group remained weak.
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Is This a Buying Opportunity?
The pullback comes as investors question whether Nvidia can keep up with strong demand for its H100, H200, and Blackwell GPUs. The company called the supply talk “erroneous chatter,” but its response did little to calm doubts. The worry added to broader concerns about expensive AI stocks and weak market sentiment this month.
Even so, some analysts see the sell-off as a buying opportunity. UBS said the weakness in semis could open the door for entry, helped by solid earnings from big tech, steady demand for AI chips, and the prospect of Fed rate cuts. The bank also pointed out that while September is often weak for stocks, October and November tend to bring stronger gains, which could lift the sector.
For now, the overall decline shows how much the sector depends on Nvidia. With NVDA stock below its 50-day moving average (DMA), volatility is likely to stay high.
However, chips are central to the AI boom, so the pullback may be seen as a buying chance rather than a reason to sell for long-term investors.
Which Chip Stock Is the Best Buy?
Turning to Wall Street, out of the six stocks mentioned above, Marvell offers the most upside and carries a Strong Buy rating. Nvidia and Lam Research are also rated Strong Buy, with an upside potential of 23% and 16%, respectively.
KLA and AMD are rated Moderate Buy, with upside of about 14% each. Meanwhile, Broadcom has a Strong Buy rating but offers the least upside potential among the group.
