When Micron (NASDAQ:MU) bounced back last week, the semiconductor stock signaled a potential end to the correction in the tech sector as a whole. Yet Applied Materials (NASDAQ:AMAT) and Lam Research (NASDAQ:LRCX) are still down sharply from yearly highs.
Speculators are adjusting for the near-term risks ahead. First, valuations in some tech stocks are too high and could fall. As the appetite for risk declines, investors will not want to overpay for stocks like Zoom (NASDAQ:ZM) or DocuSign (NASDAQ:DOCU). Conversely, the growth rates for these firms are showing no signs of slowing down.
Cautious investors may want to avoid accumulating Nvidia (NASDAQ:NVDA) or AMD (NASDAQ:AMD) at this time, due to valuation concerns.
Instead, Intel (NASDAQ:INTC) continues to pay a steady dividend and enjoys favorable retail exposure with its channel partners. For example, Dell (NYSE:DELL) and Lenovo (LNVGY) often feature Intel-powered systems over AMD. Besides, consumers need integrated chip solutions, which Intel offers. AMD has more cores and better graphics performance. But commercial sales rely only on the basic features.
In the mobile space, Qualcomm (NASDAQ:QCOM) is reasonably priced at current levels. The stock could continue outperforming the index as the smartphone refresh continues. Bargain hunters may wait for a dip in QCOM stock while shareholders need not sell, even if the stock underperforms.
By sticking to companies that are still growing, investors may wait out the correction in the technology sector and come out ahead.
