Chip Stocks to Buy After Their Worst Day Since June
2026-10-26 03:17
•Daniel Sparks •The Motley Fool
••••• •••• Axe Cap view
Buying the Dip in Global Chip Stocks
A steep sell-off in semiconductor shares sparked by supply issues looks more like an entry point than a warning sign.
Last week’s sharp drop in major chip stocks—some of their worst since June—was driven by supply bottlenecks, not a slide in demand. This matters for South African investors because companies like Naspers and Prosus lean heavily on global tech trends, with exposure to AI and data centres that need these chips. Stocks like Lam Research and AMD show robust outlooks and booming revenues despite falling prices. This suggests the sell-off is a risk-off reaction best seen as a buying opportunity. However, if global supply constraints worsen, or the US dollar strengthens dramatically against the rand (USD/ZAR), it could pressure margins and dampen South African tech-linked counters. For now, it seems premature to sell quality growth linked to semiconductors when their underlying fundamentals remain solid. this is just our opinion and not financial advice
Watch the USD/ZAR closely and consider adding to offshore tech exposure through Prosus or Naspers on dips, while trimming non-tech risk if USD/ZAR jumps over 19.5. Avoid standalone local chip plays as they are limited.
- Prosus
- Naspers
- USD/ZAR
- Worsening global chip supply constraints
- Significant rand depreciation vs. USD
6/10
The semiconductor index fell 6.7% on Oct. 22, its worst day since June, with major chip stocks declining sharply. However, the sell-off appears to be a buying opportunity, as the decline was triggered by supply constraints rather than weak demand. Lam Research reported record revenue and expects industry equipment spending to exceed $200 billion by 2027. Micron, AMD, and Marvell all maintain positive outlooks despite the stock price declines, with none cutting guidance.
Our take is based on reporting first published by The Motley Fool.