Investors shouldn’t let the market volatility this summer get them buying semiconductor stocks, says Cantor Fitzgerald. “Our view is to continue moving forward through the current mid-cycle correction and maintain an overweight to semiconductors,” analyst CJ Muse wrote in a weekend client note. The recommendation comes on the heels of turmoil in the semiconductor sector, with the PHLX Semiconductor Sector Index plummeting in six weeks before recovering most of its losses. The index is up 49% year to date. The recommendation marks the start of a key week for the industry, with artificial intelligence pioneer NVIDIA releasing quarterly earnings on Wednesday. Investors have come to view the Jensen Huang-led chipmaker’s earnings as a barometer for the AI industry as a whole. Wall Street is listening intently for signs that clients continue to spend money on the technology, even as some megacaps face backlash for lack of immediate return on profits. Cantor Fitzgerald warns that the recent rollercoaster market movement could continue amid ongoing concerns over geopolitical risks, macroeconomic uncertainty and China’s economic growth rate. Against this backdrop, Muse urges investors to “stick to AI first and foremost.” That includes stocks such as Nvidia, Broadcom and Micron Technology. Equipment makers ASML Holdings and Western Digital could also perform well. Muse is bracing for a downturn for Qualcomm. “At this point, we believe it is critical to break down global semiconductor sales into AI, memory and other semiconductors,” he wrote.
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