Key Points
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Nvidia now trades at about 29 times earnings, well below its average valuation over the past year.
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ON Semiconductor tumbled after announcing a $7 billion all-stock acquisition of Synaptics.
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Intel’s stock has soared on its turnaround, even though the company is profitable only on a non-GAAP basis.
- 10 stocks we like better than Nvidia ›
Chip stocks have taken a beating this week. A rotation out of high-flying technology names — driven by mounting doubt about whether the industry’s enormous spending on artificial intelligence (AI) will ever pay off — has dragged the whole chip sector lower, and Friday brought more selling.
Sell-offs like this rarely bother to separate strong businesses from weak ones, which is exactly why they can create opportunities.
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Three beaten-down chip stocks stand out as worth a look right now: Nvidia (NASDAQ: NVDA), ON Semiconductor (NASDAQ: ON), and Intel (NASDAQ: INTC). Each is down for its own reasons, and each comes with meaningful risk. But for investors who can stomach the volatility, the weakness may be a chance to buy quality at a discount.
Image source: Getty Images.
1. Nvidia
Start with the most obvious name. Nvidia stock has fallen about 18% from its 52-week high as of this writing, slipping back toward $190. Yet the business behind it has rarely looked better. In its fiscal first quarter of 2027 (the period ended April 26, 2026), revenue jumped 85% year over year to $81.6 billion, and data center revenue — the heart of its AI business — climbed 92% to $75.2 billion. And management guided for second-quarter revenue of $91 billion, a sign the growth isn’t slowing yet.
What makes the pullback interesting is the valuation. After the slide, Nvidia trades at about 29 times earnings — well below the premium multiple it carried for most of the AI boom. For a company still growing this fast, with a gross margin near 75%, that isn’t a demanding price.
Of course, the stock’s risk is the one weighing on the whole sector: if AI spending cools, Nvidia’s blistering growth could normalize quickly.
2. ON Semiconductor
ON Semiconductor didn’t just get caught in the downdraft — it got hammered, falling more than 23% on Friday, to around $91, as of this writing. The trigger was its own news: a $7 billion all-stock deal to buy Synaptics (NASDAQ: SYNA), its largest acquisition ever, meant to push deeper into edge AI and so-called physical AI (intelligence built into everyday devices).
Because it’s an all-stock deal, it dilutes current shareholders, and investors seemed to balk at the price and the integration risk.
Look past the one-day drop, though, and the underlying business is turning a corner. After a long slump in demand from automakers and industrial customers, onsemi’s first-quarter revenue (for the period ended April 3, 2026) rose 5% year over year — its first growth in several quarters — while its AI data center business more than doubled.
“We exceeded expectations as demand strengthened through the quarter and we have moved beyond the cyclical trough on a path to recovery,” CEO Hassane El-Khoury said in the company’s first-quarter earnings release.
The stock trades at a price-to-earnings ratio in the 60s. But that figure says more about how depressed profits are at the bottom of the cycle than about a stretched valuation. If the recovery holds, today’s price could look cheap.
3. Intel
Intel has been the sector’s great turnaround story.
The stock has rocketed from a 52-week low near $19 to a high above $141 over the past year as new CEO Lip-Bu Tan’s overhaul gained traction — and this sell-off has only nicked it, with shares easing to around $128.
And the business behind the run-up is improving: first-quarter revenue rose 7% to $13.6 billion, non-GAAP (adjusted) earnings per share came in at $0.29, and Intel reportedly landed Tesla as the first major customer for its most advanced 14A manufacturing process — a marquee win for its struggling foundry business.
The catch is that Intel is still profitable only on a non-GAAP basis, and its foundry operation lost $2.4 billion in the quarter — even as its revenue grew. Additionally, after a run this big, the stock already prices in a turnaround that is only partway done.
Of the three, it may be the most speculative — a bet that Tan can keep the comeback going, not a cheap stock backed by proven profits.
The bottom line
Ultimately, none of these three stocks is low-risk, and the sell-off that dragged them down could have further to run if the market’s doubts about AI spending deepen. But some carry more risk than others. Intel asks investors to trust a turnaround that is still unproven and still losing money where it matters most. And ON Semiconductor pairs a genuine cyclical recovery with a big, dilutive acquisition that has yet to prove its worth.
Nvidia, by contrast, looks like a fast-growing, dominant business whose shares have fallen below the intrinsic value of the underlying business. Sure, it’s still a high-risk stock tied to the same AI cycle as the others. But of these three, it’s the one I like most.
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Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Intel, Nvidia, and Tesla. The Motley Fool recommends ON Semiconductor and Synaptics. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
