3 Chip Stocks That Still Have Gas in the Tank 

Stocks to buy

With numerous chip stocks overheating at the hands of the generative artificial intelligence (gen AI) boom, the start of summer seems like an opportunistic time to take a few chips (forgive the pun) off the table. With all of the hype surrounding lower rates, perhaps some high-flyers in the semiconductor industry have gone a bit ahead of themselves.

At some point, scorching demand for chips and chip-making equipment will reverse course, perhaps fast enough to bring a huge drawdown in today’s biggest semi winners. Semiconductor firms are in a rather cyclical industry, after all.

What’s complicated is knowing when the end of the cycle is upon us, especially if there’s some technological revolution going on. Indeed, tech-driven revolutions don’t happen very often. But when they do, cycles can last longer, perhaps much more prolonged than historical “booms.”

Given the real fundamental gains from embracing gen AI tech, we may be partying like it’s 1996, not 1999. And if that’s the case, it’s not too late to buy the chip stocks, especially the “cheaper” ones.

Nvidia (NVDA)

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It did not take long for Nvidia (NASDAQ:NVDA) to become the world’s second-largest company. As of Monday, a 10-for-1 stock split is in place, making NVDA stock much more accessible for small retail investors.

Though there are bound to be some rough patches as Nvidia moves through its split week, I continue to view Nvidia as the top AI innovator to own, even as the unstoppable stock blasts off to previously unfathomable new heights. In March, Nvidia unveiled its Blackwell chips, raising the bar for modern AI accelerators.

More recently, the unstoppable GPU giant gave a glimpse into the future (specifically 2026) with its Rubin GPUs and CPUs. Undoubtedly, Nvidia seems to be showing its hand a bit early. Such a move, I believe, suggests the utmost confidence from top boss Jensen Huang. Though rivals will do their best to catch up to Nvidia, it seems like the gap stands to widen further with the Rubin platform.

Can Rubin act as the driver that keeps NVDA stock rolling higher? That’s the $4 trillion question. Perhaps 46.7 times forward price-to-earnings (P/E) isn’t too high a price to pay for the magnitude of growth ahead.

Advanced Micro Devices (AMD)

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Nvidia Blackwell and Rubin are profoundly impressive innovations, but competition is bound to get fiercer as the hunger for AI hardware remains. Advanced Micro Devices (NASDAQ:AMD) is another chip firm that could help feed the hunger as it looks to advance its line of AI chips. Indeed, AMD is trailing Nvidia right now, and the stock price suggests such, with AMD stock now off more than 20% from its all-time high.

Things could change in the second half as AMD readies to launch its all-new Instinct MI325X accelerator in the fourth quarter while looking to trickle in more details about its future offerings.

The MI350 and MI400 series, respectively, could be intriguing innovations to watch in 2025 and 2026. Specifically, the MI400’s new “Next” architecture may be the catalyst to close the gap with Nvidia, albeit slightly.

Either way, Nvidia’s Jensen Huang must keep flooring it, with such a powerful rival in AMD firing on all cylinders. Like Nvidia, AMD is seemingly expensive, but with the magnitude of growth that could be on the horizon, I still view AMD stock as a cheap chip.

Intel (INTC)

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Intel (NASDAQ:INTC) is a chip stock fit for true contrarians who want a shot at the deepest value possible. In numerous prior pieces, I urged investors not to count the long-time laggard out just because of its dreadful recent performance. Undoubtedly, Intel is behind, and as its rivals make big strides, the gap seems to widen every day.

Further, massive investments in foundries increase losses and further complicate the valuation process. As you may know, it’s costly to build semiconductor fabricators. And though such bets will eventually pay off, investors seem unsure whether big bets today will translate into a respectable return.

Indeed, you can buy many great asset-light chip designers that aren’t spending so much to build out foundries.

Melius Research’s Ben Reitzes thinks it’s all too easy for AI investors to buy NVDA or AMD rather than a giant question mark like Intel. I couldn’t agree more. Either investors can’t understand how to value the name any longer due to uncertainties regarding future chip releases and foundry bets, or they’d much rather pay a premium for a leader.

Either way, Intel is a misunderstood company amid its transition. At 28.6 times forward P/E, INTC stock is incredibly cheap.

On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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