Key semiconductor stocks sold off over the summer even after Broadcom beat second-quarter estimates, as its revenue guidance disappointed an already uneasy chip sector. The Motley Fool's Will Healy now rates Nvidia a buy, AMD a hold, and Qualcomm a sell.
Chip stocks sold off through the summer despite Broadcom's second-quarter earnings beating estimates, because management's revenue guidance disappointed investors already uncertain about the sector's outlook. Broadcom itself has still climbed almost 600% over the last five years. Against that backdrop, Motley Fool analyst Will Healy names one chip stock to buy, one to hold, and one to sell.
Nvidia's growth outpaces its stock price
Healy calls Nvidia a buy, even though the stock has risen nearly 1,800% from its October 2022 low. Four years ago, Nvidia reported just $6.7 billion in quarterly revenue after growing only 3% year over year. Its most recent quarter brought in $96.2 billion in revenue, up 106% year over year, and that growth has pulled its P/E ratio down to 28 despite the share-price gains.
A forecast that revenue growth will slow to 65% could still unsettle some buyers, and Nvidia's $5.3 trillion market cap makes further percentage gains harder to come by. Even so, Healy argues its downside looks limited even in a severe AI-sector downturn.
AMD holds steady despite a rich valuation
AMD stock has gained over 790% since October 2022, partly on optimism about its MI450 chip and Helios rack system challenging Nvidia in AI accelerators. Unlike Nvidia, whose data center segment makes up 92% of revenue, AMD's data center business supplied only 57% of revenue in the first half of 2026. Its total revenue rose 44% year over year to almost $22 billion over that period, trailing Nvidia's pace.
That slower growth comes with a trailing P/E of 132 and a forward P/E of 68. Those elevated valuations may not fully reassure investors worried about a potential AI infrastructure slowdown, Healy says. He still rates AMD a hold, noting that even amid fears AI model developers are losing control of the technology, it is unlikely to disappear, and AMD should keep benefiting.
Qualcomm faces a shrinking handset business
Qualcomm trades at a P/E of 21, a level that looks comparatively cheap. Its new data center chips have already drawn interest from hyperscalers Meta and Amazon, yet Healy still rates the stock a sell. Its handset revenue shrank 9% annually in the first nine months of fiscal 2026, a period that ended June 26, as Apple shifts to in-house modems.
That shift is expected to cut Qualcomm's sales to Apple by about half sequentially in the December quarter. Its automotive segment grew revenue 39% annually in the first three quarters of fiscal 2026, but that wasn't enough to stop overall revenue from falling 1%. Healy says a comeback isn't out of reach, but he'd rather watch from the sidelines until Qualcomm regains its footing.
Source: The Motley Fool
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