Amidst the storm of a market sell-off, the Nasdaq Composite has taken a beating, plummeting into correction territory faster than you can say “bear market.” The recent market turbulence has culminated in a trifecta of consecutive days with sharp declines, as investors grapple with bleak economic indicators and the aftershocks of the Bank of Japan’s surprise rate hike, setting off tumultuous reverberations across global markets.
But for seasoned investors, these tempestuous times offer more than just nail-biting anxiety – they present promising opportunities. The current correction may linger in uncertainty, but if the downturn persists, having a handpicked selection of stocks ready to scoop up can be your silver lining. So, without further ado, let’s delve into three shining stars that are currently on sale.
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Reigniting the Alphabet
A stalwart of tech stocks, Alphabet has been a steadfast player for over a decade, firmly planted in the FAANG constellation and the “Magnificent Seven.” Despite tumult from the realms of generative AI technology, Alphabet’s dominance remains unchallenged. Weathering initial skepticism about its AI prowess, the tech giant has showcased robust growth in recent quarters, accentuated by improved margins post a strategic round of layoffs. With its digital advertising empire, spearheaded by Google Search, delivering consistent growth and a burgeoning cloud computing segment finally reaping profits, Alphabet stands at the cusp of resurgence.
At present, Alphabet’s stock has marked a 17% descent from its recent peak, presenting investors with an enticing entry point at a price-to-earnings ratio of 23. Even under the shadow of an impending recession, Alphabet’s unassailable competitive edge is poised to endure, promising a rebound from the recent slump and an eventual climb to greater heights, as evidenced by its recent second-quarter performance showcasing a 14% revenue surge and a staggering 26% leap in operating income.
The Mighty Titan: Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSMC) stands as the reigning giant in the realm of contract semiconductor foundries, holding the reins as the world’s premier producer of advanced chips. Amidst the burgeoning AI revolution, TSMC’s significance amplifies, commanding a pivotal role by providing 90% of the globe’s cutting-edge chips. Armed with superior technology, strategic alliances with industry titans like Apple, Nvidia, AMD, and Broadcom, substantial capacity, and a consistent track record of execution, TSMC’s grip on the industry remains unyielding.
While subject to the cyclicality inherent in the semiconductor sector, TSMC has experienced an upswing post a sector-wide slowdown. With a remarkable 40% revenue surge in the second quarter, translating to $20.8 billion or a 33% dollar hike, coupled with a parallel upsurge in net income, TSMC is an enticing prospect. Currently trading at a modest P/E valuation of 28 and marked down by 25% from its recent pinnacle, TSMC’s competitive moat and growth trajectory make it a compelling bargain.
The Resilient Phoenix: Advanced Micro Devices
Advanced Micro Devices (AMD) emerges as a phoenix reborn from the ashes, following a robust earnings report that brought forth a glimmer of hope amidst a bleak landscape. While a 40% drop from its March peak might cast shadows of doubt, AMD has weathered the storm far better than most, currently down 28% from the Nasdaq zenith just weeks ago. The recent market turmoil witnessed AMD maintaining its ground, inching upwards by 2% on a day when the Nasdaq witnessed a 3.4% freefall.
Benefitting from the woes of rival Intel, struggling with substantial layoffs and dividend suspensions, AMD has seized the opportunity to conquer the AI data center domain with its innovative Mi300 chip. The second-quarter saw AMD record a staggering 115% surge in data center revenue to $2.8 billion, fueled by the AI boom. While slight weaknesses in embedded and gaming segments tempered overall revenue growth, the robust growth in the data center arena augurs well for AMD’s future prospects. At a P/E of 49 on adjusted earnings per share, AMD presents itself as an attractive proposition amid the market chaos, with burgeoning data center revenues and Intel’s floundering only amplifying its allure.
Before traversing the investing landscape of Taiwan Semiconductor Manufacturing, ponder on this: the Motley Fool’s Stock Advisor analyst team uncovered what they believe are the 10 best stocks for investors to hoard right now, with Taiwan Semiconductor Manufacturing notably missing from the list. A tidbit from history – contemplate the monumental returns on Nvidia when it made this esteemed list back in 2005. The Stock Advisor service, with its stellar track record surpassing the S&P 500 return fourfold since 2002, is a testament to its prowess in navigating the tumultuous waters of investing.
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