Selling the Nasdaq Stock Market: 3 Stocks to Put on Your Buy List

Stock market frequency spreads rapidly. Just weeks after the major market indexes peaked, stocks are falling with Nasdaq Composite (^IXIC 2.87%) a correction has already entered (down more than 10% from a recent peak).

Stocks fell sharply on Monday for a third straight day as investors struggled with poor economic data and a shock in Japan after Nikkei fell by double digits as the Bank of Japan surprised investors with a rate hike. This action started a massive unwinding of a global “carry trade” in which investors borrowed yen at near-zero rates and invested it elsewhere.

Seasoned investors know that while stock market selloffs are scary, they also provide good buying opportunities. No one knows how long this correction will last, but it’s a good idea to have a list of stocks to buy if the decline continues. Read on to see three top stocks that are on sale right now.

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1. The alphabet

Alphabet (GOOG 1.92%) (GOOGL 1.94%) has been a top tech stock for over a decade, a core member of both FAANG stocks and the “Magnificent Seven,” and its eminent position shows no signs of changing despite upheavals from generative AI technology.

Alphabet has overcome early doubts about its AI capabilities and has continued to post strong growth in recent quarters. It also boosted margins thanks in part to a round of layoffs last year. Its core digital advertising business led by Google Search continues to generate solid growth, and its cloud computing business has grown profits after years of losses.

As of Monday, Alphabet shares are now down 17% from their peak a few weeks ago, and the stock already looks like a good value at a price-to-earnings ratio of 23.

Even if the economy enters a recession, Alphabet’s competitive advantages will remain intact, and the stock should eventually recover from recent losses and return to new highs. Its second-quarter earnings report included revenue growth of 14% and operating income growth of 26%, showing that there is still plenty of growth for the tech giant.

2. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (TSM 6.13%)or TSMC, is the largest semiconductor foundry in the world. It is an essential cog in the global economy in normal times, but in the AI ​​revolution it has become even more valuable as it produces around 90% of the world’s advanced chips. It has established a competitive edge through its technology, customer relationships with people like Apple, Nvidia, AMDand Broadcomhigh capacity and a track record of execution.

Like the rest of the semiconductor sector, TSMC is subject to cyclical forces, but its business has been growing since the sector’s slowdown a year ago. In the second quarter, revenue rose 40%, or 33% in dollars, to $20.8 billion, while net income rose at a similar rate.

Shares of Taiwan Semi are now down 25% from their peak a few weeks ago and trade at a modest P/E of 28, which seems like an excellent price for a company with its competitive advantages and growth rate.

3. Advanced microdevices

Advanced microdevices (AMD 5.95%) may not look as resilient as the other two stocks on this list, but the chipmaker deserves a closer look following a strong earnings report last week.

AMD is down more than 40% from its peak in March, when enthusiasm for its new AI chips appeared to be peaking, but the stock is also down 28% from its Nasdaq peak a few weeks ago, even as its earnings report impressed investors last time. week.

However, AMD now seems to be capitalizing on the AI ​​boom. When shares fell sharply on Friday, AMD finished flat and closed Monday up 2%, even as the Nasdaq lost 3.4%. Part of the reason for these gains is the dismantling of the rival Intelwhich announced it would cut at least 15 percent of its workforce last Thursday and stop paying a dividend. Intel’s quarterly results and guidance also missed expectations, showing ongoing challenges in its foundry business and beyond continue to plague the company.

This has opened up an opportunity for AMD, and the company already seems to be tapping into the AI ​​data center market with its new Mi300 chip. In the second quarter, AMD reported a 115% increase in data center revenue to $2.8 billion, the segment that led the AI ​​boom. While weakness in the embedded and gaming segments hurt overall revenue growth, momentum in the data center market bodes well for future results.

On an adjusted EPS basis, the stock trades at a P/E of 49, which seems like a good price given its data center growth. With Intel floundering and revenue rising in key areas, AMD looks like a good buy for any weakness from market panic.