Goldman Sachs is sifting through the rubble of AI stocks for bargains.
“We think stocks are now clearly in oversold territory,” James Schneider, an analyst at Goldman Sachs, said of semiconductor stocks.
Three of its top names to buy: Nvidia (NVDA), Broadcom (AVGO), and AMD (AMD).
“Even in a ‘no growth’ scenario for 2028 (which we view as relatively unlikely), NVDA/AVGO trades at 12X/13X this benchmark – which we believe is compelling at current levels,” Schneider wrote in a note. “We find AMD very attractive given the growth we believe we can achieve, albeit at a less attractive valuation.”
November was brutal for tech stocks.
The S&P 500 (^GSPC) lost 4.3% of its market value on November 5 as investors weighed what an Election Day blue wave would mean for AI data center construction. This decision wiped out a value of 3 trillion dollars.
The Dow Jones Industrial Average (^DJI) plunged 1,800 points in its worst single-day rout since 2020. The tech-heavy Nasdaq (^IXIC) fell 5.5%, dragged down by semiconductor and cloud giants such as Micron (MU) and Sandisk (SNDK).
Stocks continued to trade in a downward trend, particularly semiconductor stocks.
The Philadelphia Semiconductor Index (^SOX) is down 21% over the past month and 6% in November alone.
“We believe the market faces competing tensions regarding semiconductors: (1) How is the funding gap between current investments and available cash flow for hyperscalers and AI model labs closed? Schneider explained. “After the US election on November 3, the second of these tensions increased with greater uncertainty over the pace of data center construction in states like Texas.”
He added: “(While) we recognize that there may be few catalysts for stocks to move higher before the end of the year, we believe the risk/reward is compelling for some names at current levels.”
Brian Sozzi is the editor-in-chief of Yahoo Finance. Follow him on @BrianSozzi, InstagramAnd LinkedIn.
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