Semiconductor stocks were routed last Friday, June 5, with the sector losing a whopping $1.4 trillion in market cap in a single day. The PHLX Semiconductor Sector index shed more than 10% of its value in a single session, driven by a stronger-than-expected jobs report that has led to an increase in the odds of the Federal Reserve raising interest rates this year.
Not surprisingly, major semiconductor names took a big beating. Nvidia (NVDA +0.81%) was down by more than 6%, while foundry giant Taiwan Semiconductor Manufacturing (TSM +2.15%) slipped nearly 7%. Even Broadcom (AVGO +3.12%), which released a strong set of results on June 3, wasn't immune from the sell-off, falling nearly 8% on Friday.
It won't be surprising to see semiconductor stocks recovering from this pullback. The sector has played a key role in driving the stock market rally in recent weeks, and investors may have decided to book profits after pricing in the potential impact of a strong jobs report on the Fed's policy. However, investors will do well to note that the semiconductor sector's rally has been powered by strong revenue and earnings growth, driven primarily by artificial intelligence (AI)-fueled demand.
So, if you have $1,500 in investible cash right now (after paying your bills, clearing any high-interest loans, and saving for tough times), it may be a good idea to capitalize on the semiconductor sector's recent pullback by putting that money into the names discussed in this article, either individually or combined.
Let's take a closer look at some of the top chip stocks you can consider buying right away.
Image source: Nvidia.
Nvidia and Broadcom dominate the AI chip market in their respective niches. Nvidia sells graphics processing unit (GPU)-based chip systems, and Broadcom designs custom AI processors and networking components. Both kinds of chips are in solid demand due to their distinct advantages. While GPU-based systems are considered ideal for AI training, Broadcom's custom processors are being used for inference-focused tasks in AI data centers.
Not surprisingly, both companies have been benefiting big time from the massive investments in AI data centers. Nvidia's revenue growth in Q1 of fiscal 2027 (for the three months ended April 26) accelerated to 85% year over year from 69% in the same quarter last year. Its top line landed at $81.6 billion last quarter, and the $91 billion estimate for the current quarter points toward a 95% year-over-year increase.
Nvidia's expansion beyond GPUs into the server processor market and its focus on emerging niches, such as physical AI and robotaxis, explain why the company's growth trajectory is improving despite the rising competition in AI chips. As a result, analysts have become bullish about Nvidia's earnings growth prospects.
Data by YCharts
The stock trades at just 31 times earnings, even though it is estimated to clock earnings growth of 88% this fiscal year. If Nvidia were to trade in line with the tech-focused Nasdaq Composite index's earnings multiple of 40 by the end of fiscal 2027 (which ends in January 2027), its stock could reach $358 (based on the fiscal 2027 earnings per share estimate of $8.96), a potential upside of 72%.
Similarly, Broadcom's growth rate is also picking up. The company is benefiting from lucrative contracts it has signed with multiple hyperscalers and AI companies. This explains why Broadcom's revenue in the second quarter of fiscal 2026 (which ended on May 3) increased by 48% year over year to $22.2 billion, better than the 20% growth it reported in the same period last year.
Broadcom's AI revenue rose by 143% year over year to $10.8 billion. What's more, it expects AI revenue to jump by more than 200% to $16 billion in the current quarter. Importantly, the company's AI revenue growth will continue to improve as it starts ramping up the sales of its AI chips to customers like Anthropic, Meta Platforms, OpenAI, and Google.
As a result, Broadcom sees its AI revenue landing at more than $100 billion in fiscal 2027, which would be a significant improvement over what it has been clocking so far this year. Analysts anticipate a 70% increase in Broadcom's earnings this year, followed by a 66% spike in fiscal 2027 to $19.32 per share. This makes Broadcom a solid buy at 34 times forward earnings.
Assuming its earnings per share indeed reach $19.32 in fiscal 2027, and it trades at 40 times earnings (in line with the Nasdaq Composite), the stock could jump to $772. That's nearly double where Broadcom stock is right now.
TSMC is the world's largest semiconductor foundry. It manufactures chips designed by fabless chipmakers, such as Nvidia, Broadcom, AMD, Qualcomm, and others. What's worth noting is that TSMC's share of the global foundry market increased by five percentage points year over year in Q1 2026, rising to 73%, according to Counterpoint Research.
There's a massive gap between TSMC and second-placed Samsung in the foundry market, with Samsung holding just 7% share. As TSMC makes AI chips for multiple chip designers serving different industries, including smartphones, personal computers (PCs), and data centers, it is easy to see why it has been clocking impressive growth since the beginning of 2024.
Data by YCharts
The company's earnings per share stood at $10.65 in 2025. The following chart suggests that TSMC's earnings growth will remain robust over the next three years, with its bottom line poised to more than double during this period (from 2025 levels).
Data by YCharts
TSMC stock trades at 27 times forward earnings. This sets it up for solid upside over the next three years, as it has the potential to more than double if its earnings multiple aligns with the Nasdaq Composite by the end of 2028. So, this is another top AI stock you can consider buying after its recent slip, since it could go on a bull run given its bright prospects.
Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Meta Platforms, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.
Making the world smarter, happier, and richer.
© 1995 – 2026 The Motley Fool. All rights reserved.
Market data powered by Xignite and Polygon.io.
About The Motley Fool
Our Services
Around the Globe
Free Tools
Affiliates & Friends
The semiconductor sector has taken a beating of late, but that is good news for investors looking to buy top chip stocks at attractive valuations.
 Semiconductor Stocks to Buy Before They Soar Once Again – The Motley Fool){kind=link}
