The past two years have generally favored one sector of the stock market: the technology sector, with particular attention paid to the semiconductor industry. As with any market popularity cycle, there was one favorite name that investors decided to pay attention to: NVIDIA Company NASDAQ: NVDA. However, the cycle has run its course and the stock is now cooling off based on recent price action.
Over the past three months, an entire quarter, NVIDIA’s stock performance has fluctuated between negative 4% and positive 8%, which can be considered flat at best. And all this while other names in quantum computing have taken over in terms of attention and performance, such as Righetti Computing Inc. NASDAQ: RGTIwhich gives semiconductors time to correct any mispricing opportunities.
That’s why stocks lagging behind the NVIDIA wave could see their time in the coming months as these corrections bring a sense of reality back to the market. By meeting these criteria, investors can find potential buying opportunities in companies such as Advanced Micro Devices Inc. NASDAQ: AMD with today’s discounts or even some companies serving as a key support function for chip production such as Axcelis Technologies Inc. NASDAQ: ACLS And Kulike and Soffa Industries Inc. NASDAQ: CALL.
AMD: Closing the gap in NVIDIA stock
When Advanced Micro Devices investors take stock against NVIDIA, a few things will immediately become clear about this core opportunity. First is the price action itself: NVIDIA shares are now trading at 90% of their 52-week high, while Advanced Micro Devices shares are down to a low of 53% of their 52-week high.
Advanced microdevices today
Advanced microdevices
As of 01/17/2025 16:00 Eastern
- 52 week range
- $114.41
▼
$227.30
- P/E ratio
- 109.42
- Target price
- $178.61
Typically, when such large gaps in price action occur, there must be a good reason for the market to widen spreads. Today it looks like he’s gone. In fact, investors might argue that Advanced Micro Devices should start catching up to NVIDIA’s price cuts.
The reason is earnings per share (EPS) growth forecasts coming from Wall Street analysts. For NVIDIA, analysts are forecasting earnings per share to hit $6.22 in 2026, implying an expected growth rate of 27.5% over the next 12 months. On the other hand, Advanced Micro Devices is projected to deliver earnings per share of up to $4.16 in 2026, a much more attractive growth rate of up to 41.5%.
Since EPS and EPS growth typically drive stock prices and valuations, it would be reasonable to see Advanced Micro Devices catch up with NVIDIA. This is especially true since the market is already willing to pay a forward price-to-earnings (P/E) ratio of 33.1x for Advanced Micro Devices, compared to 19.5x for NVIDIA stock.
Some would call it expensive; others will realize that the market will always be willing to pay a premium for stocks it believes will outperform in the near future, supporting the thesis behind a potential long position in Advanced Micro Devices.
Go to the side with Axelis and Kulice
Another area that is often overlooked due to the popularity of semiconductors is the spin-off industries that support chip production, such as equipment manufacturers and suppliers. This is where both Axelis and Kulicke come into play for investors to consider another potential shot at NVIDIA’s money.
Axcelis Technologies today
Axelis Technologies
As of 01/17/2025 16:00 Eastern
- 52 week range
- $66.75
▼
$158.61
- P/E ratio
- 10.59
- Target price
- $155.83
Here, investors can choose from two different settings. Axcelis shares are trading at their lowest price action level, just 46% off their 52-week high, giving investors a better risk-reward profile to consider as the limited downside pales in comparison to the potential upside.
Wall Street analysts have a consensus price target of $155.8 per share for the company, suggesting upside potential of up to 115.5% from today’s levels. Investors should think about this. On the other hand, Kulike and Soffa stocks offer good value for those who prefer momentum.
Kulitske and Soffa Industries today
Kulitske and Soffa Industries
As of 01/17/2025 16:00 Eastern
- 52 week range
- $38.20
▼
$56.71
- Dividend yield
- 1.73%
- Target price
- $52.40
KLIC stock, trading at 83% of its 52-week high, has a few more bull runs left in store, with Wall Street analysts now forecasting earnings per share to hit $2.82 in 2026, with a growth rate of 59.3 %. This may explain the recent activity of institutional buyers of the stock.
Artemis Investment Management decided to increase its stake in Kulicke shares by as much as 20.6% as of January 2025, bringing its net position to a high of $9.9 million today. The move also serves as an indicator for investors to gauge how much Participants may become bullish on this stock in the future.
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