The tumult in the stock market is rapidly spreading. Just weeks after reaching historical highs, the crash has hit with the Nasdaq Composite (NASDAQINDEX: ^IXIC) already tumbling into correction territory, marking a more than 10% decline from its recent peak.
Stocks took a sharp nosedive for the third consecutive day on Monday as investors grappled with gloomy economic indicators and a shock in Japan after the Nikkei plunged by double digits following the unexpected rate hike from the Bank of Japan. This move kickstarted a full-blown global “carry trade” unwinding where investors borrowed yen at negligible rates and invested elsewhere.
The veterans of the market understand that amidst the sell-offs lurk excellent buying opportunities. While the duration of this correction remains uncertain, it’s wise to have a list primed with potential buys if the descent persists. Now let’s delve into three prime stocks currently on a bargain.
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Embracing Alphabet Amidst Adversity
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) stands tall as a tech stalwart for over a decade, a prominent member of FAANG stocks and the “Magnificent Seven,” resilient in the face of disruptive generative AI technology.
Although early skepticism surrounded its AI prowess, Alphabet has continued to showcase robust growth in recent quarters. Bolstered by a round of layoffs last year, the tech giant has elevated margins and sustained strong growth. Google Search, driving its core digital advertising business, maintains solid growth, while its cloud computing sector has turned profitable after languishing in losses for years.
Currently down by 17% from its recent peak, Alphabet stock presents a compelling value proposition with a price-to-earnings ratio of 23.
Even amid an economic downturn, Alphabet’s competitive edge remains solid, poised for a rebound from recent setbacks to reach new pinnacles. With the second-quarter earnings unveiling a 14% revenue surge and a 26% leap in operating income, the tech giant boasts ample room for growth.
Rising Strong with Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC, claims the mantle of the world’s largest contract semiconductor foundry, a pivotal player in the global economy and a linchpin amid the AI revolution by catering to around 90% of the world’s advanced chips.
Amidst semiconductor sector cyclicality, TSMC has witnessed an upswing in its business following a sector slowdown a year ago. In the second quarter, revenue soared by 40%, or 33% in dollars to $20.8 billion, accompanied by a parallel increase in net income.
Down by 25% from its recent zenith, Taiwan Semi stock trades at a modest P/E valuation of 28, a bargain for a company boasting such competitive advantages and growth rates.
The Resurgence of Advanced Micro Devices
Advanced Micro Devices (NASDAQ: AMD), although seemingly less resilient than its peers, merits close attention post a robust earnings report last week.
Despite a 40% dip from its peak in March, AMD now witnesses a 28% decline from Nasdaq’s recent summit. Notably, amidst the broader market crash, AMD remained stoic, securing a 2% upswing while Nasdaq incurred a 3.4% dip.
Amidst Intel’s stumble, announcing workforce cuts and dividend halts alongside underwhelming quarterly results, AMD spotted an opportunity. Capitalizing on the AI data center segment with its new Mi300 chip, AMD reported a staggering 115% surge in data center revenue to $2.8 billion in the second quarter.
At a P/E of 49 for adjusted earnings per share, amidst the burgeoning data center growth, AMD’s stock appears attractively priced. With Intel’s floundering stature and revenue escalation in key segments, AMD emerges as a prime buy amid market mayhem.
Should you Commit $1,000 to Taiwan Semiconductor Manufacturing?
Prior to investing in Taiwan Semiconductor Manufacturing, weigh this:
The Motley Fool Stock Advisor team recently pinpointed their top 10 stock picks poised for substantial returns, however, Taiwan Semiconductor Manufacturing did not make the cut. The 10 chosen stocks hold potential for significant gains in the forthcoming years.
Reflect on Nvidia’s inclusion in a similar list back in April 2005—a $1,000 investment then would have burgeoned into $643,212!
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*Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman holds positions in Broadcom. The Motley Fool holds positions in and recommends Advanced Micro Devices, Alphabet, Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool endorses Broadcom and Intel and suggests options for long January 2025 $45 calls on Intel and short August 2024 $35 calls on Intel. The Motley Fool maintains a disclosure policy.