Volatility be damned, keep buying chip stocks in 2H, says Cantor

Investors shouldn’t let this summer’s market volatility stop them from scooping up shares of semiconductor names, Cantor Fitzgerald says. “Our call — just keep truckin’ on amidst the current mid-cycle correction and remain overweight semiconductors,” wrote analyst C.J. Muse in a note to clients over the weekend. The recommendation comes on the heels of a tumultuous stretch for the sector that saw the PHLX Semiconductor Sector Index slump —and then recover most of those losses — all in a six-week span. The index is up 49% year to date. The recommendation heralded a critical week for the industry, with quarterly financial results from AI bellwether Nvidia due out Wednesday. Investors have come to view Jensen Huang-led chipmaker’s earnings as a barometer for the entire AI industry. Wall Street is paying rapt attention for signs that customers are continuing to spend on the technology, even as some mega caps face a backlash over their lack of an immediate profit payoff . To be sure, Cantor Fitzgerald warns that the recent rollercoaster market action may continue in the face of persistent geopolitical risks, macroeconomic uncertainties and concern about the rate of economic growth in China. Against this backdrop, Muse urges investors to “stick with AI first and foremost.” That includes names such as Nvidia , Broadcom and Micron Technology . Equipment maker ASML Holding and Western Digital may also outperform. Muse is bracing for underperformance from Qualcomm . “At this point, we believe it is very important to break out global semiconductor revenues between AI, memory, and then the rest of semiconductors,” he wrote.