Analyst Advocates Buying Chipmaker Dip Amid Tech Selloff

Melius Research's Ben Reitzes sees the current tech sector weakness as a buying opportunity, particularly for semiconductor stocks. His top picks include Nvidia, Broadcom, Micron, and AMD—companies positioned to benefit from what he calls a "20-year compute trend" comparable to oil's historical significance.

Reitzes draws a sharp contrast between chipmakers and hyperscalers like Microsoft, which he criticizes for its "messy" AI strategy. While cloud providers bleed cash on infrastructure spending, semiconductor firms stand to gain from their insatiable demand for processing power. The analyst notes hyperscalers have even suspended stock buybacks to fund their AI ambitions.

This divergence is reflected in performance metrics. While the Invesco QQQ Trust (QQQ) gained 36% over twelve months, semiconductor-focused ETFs like SOXL and SOXX experienced sharp declines during the recent selloff—creating what Reitzes views as a prime entry point for long-term investors.