9 Chip Stocks With the Potential to Bounce Back After the Sell-Off

• US semiconductor stocks faced broad selling pressure, with AI spending concerns, weak PC demand and deal dilution weighing on sentiment.
• A sharp correction has created potential opportunities among semiconductor stocks with strong fundamentals and attractive valuations.
• Nine stocks screened for Fair Value upside of 19.2% to 46.6%, while analyst targets indicate potential gains of 27.1% to 102.9%.

US semiconductor heavyweights came under renewed pressure on Monday, November 2. Of the 12 sector stocks with market capitalizations above $100 billion, 11 ended the session lower. The only gainer was Texas Instruments, which edged up just 0.4%.

The selloff followed an equally weak session on Friday, October 30, when all 12 stocks closed in the red. Over the past week, losses have spread across the sector, with Intel down 36%, Marvell falling 29.6%, AMD losing 16.7% and Qualcomm declining 12%. Even Nvidia, the sector’s leading AI chipmaker, has shed 7.3%.

Intel has been the main driver of the sector’s decline. On Friday, the stock plunged 28.6% to $65.76, marking its worst trading session since the 1970s. The selloff came despite quarterly results that beat expectations, with revenue rising 21% year-over-year to $16.5 billion.

The disappointment stemmed from the company’s fourth-quarter outlook. Intel forecast revenue of $15 billion to $16 billion, below market expectations of approximately $17 billion. It also projected adjusted EPS of just $0.25.

Management attributed the weaker outlook to softness in the PC market. Strong AI-driven demand is pushing up prices for memory and other components, making computers more expensive and weighing on sales. The shutdown of a factory in Israel has also affected the outlook. On Monday, Intel fell another 8.8% to $59.97.

The broader sector also came under pressure from Marvell, which plunged 12.72% to $171.41 on Monday. The company announced its $115 billion acquisition of Lumentum, to be paid entirely in stock, raising concerns about significant dilution for existing shareholders. AMD also fell 7.52% on Monday, following a 10.9% decline on Friday.

However, the selloff may be approaching a turning point. On Monday evening, most of the sector’s major stocks were trading higher in after-hours trading, pointing to a potentially stronger opening on Tuesday.

A sustained technical rebound remains uncertain while concerns over AI-related costs and weakness in the PC market persist. Rather than betting on a single stock, investors may therefore want to focus on semiconductor companies with strong fundamentals and a greater margin of safety following the correction.

Semiconductor Stocks With the Greatest Upside Potential After the Correction

We therefore turned to the Investing.com screener to identify U.S. stocks that meet the following criteria:

• Semiconductor industry
• Market capitalization greater than $1 billion
• Upside potential of more than 15% according to InvestingPro Fair Value, which synthesizes several recognized valuation models
• Upside potential of more than 25% based on the average analyst price target
• Health score greater than 2.5/5

This research has allowed us to identify 9 stocks:

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Specifically, these US semiconductor stocks show upside potential ranging from +19.2% to +46.6% based on Fair Value and from +27.1% to +102.9% based on analyst consensus.

Among these stocks are:

• Photronics (PLAB), which manufactures photomasks—the templates used to etch circuits onto silicon wafers and flat-panel displays. The stock is not widely covered by analysts, but it trades at a 19.6% discount to its fair value and has an upside potential of 50.9% according to their consensus. In the third fiscal quarter, the company outperformed expectations: adjusted EPS of $0.50 versus an expected $0.40, and revenue of $216 million. These figures were driven by the return of deferred orders and a record 44% share of high-end products in the integrated circuits business. Fourth-quarter guidance remains cautious, with adjusted EPS projected at $0.40 to $0.56. Full-year results are expected in mid-December.
• FormFactor (FORM), which designs probe cards and systems that test chips directly on the wafer. This segment has become strategic with the rise of HBM memory and high-performance computing for AI. On October 28, the company reported its fourth consecutive record quarter: $280.5 million in revenue (up 38% year-over-year) and adjusted EPS of $1.04, compared to the expected $0.86. It forecasts approximately $285 million for the fourth quarter, representing modest quarter-over-quarter growth: the current factory is nearing capacity, pending the ramp-up of the new facility in Farmers Branch, Texas. This slowdown partly explains the 19.2% discount to Fair Value, while analysts see 74.4% upside potential.

However, the other stocks on the list show more attractive potential based on Fair Value.

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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.