NVDA, AVGO Offer Best Value Among Chip Stocks Amid Recent Sell-Off, Says Morgan Stanley — Sees 'Compelling Entry Point' In Memory Stocks

According to a CNBC report, Morgan Stanley analyst Joseph Moore said in a note on Monday the firm's preferred AI investments remain compute names.

• Wall Street firms argued the recent sell-off has done little to undermine the long-term outlook for AI infrastructure spending.
• According to the report, Mizuho's Vijay Rakesh said there is still "a lot of gas left in the tank.”
• JPMorgan echoed that view, saying semiconductor stocks "should soon start to find a bid” because additional supply is unlikely to materially alter the industry's supply-demand balance before 2028.

Morgan Stanley said the recent sell-off in semiconductor stocks has created an attractive opportunity for investors, naming Nvidia Corp. (NVDA) and Broadcom Inc. (AVGO) as its top picks in AI compute while identifying memory stocks as a "compelling entry point" after their recent pullback.

According to a CNBC report, Morgan Stanley analyst Joseph Moore said in a note on Monday the firm's preferred AI investments remain compute names such as Nvidia and Broadcom, but said memory stocks have become increasingly attractive following the recent pullback, calling them a “compelling entry point.”

The VanEck Semiconductor ETF (SMH), an exchange-traded fund that provides exposure to U.S.-listed semiconductor companies, fell nearly 9% last week, registering its worst single-week fall since March 2025.

The tech-heavy Nasdaq Composite index was up 0.5% at the time of writing.

Wall Street Says AI Infrastructure Story Remains Intact

Several Wall Street firms said the recent sell-off has not materially changed their long-term outlook for AI infrastructure spending.

According to the report, Mizuho's Vijay Rakesh said there is still "a lot of gas left in the tank.” Rakesh cited AI capital expenditures, expanding gigawatt-scale power deployments and a persistent supply gap as factors that should continue to support semiconductor demand well beyond 2028.

JPMorgan echoed that view, saying semiconductor stocks "should soon start to find a bid” because additional supply is unlikely to materially alter the industry's supply-demand balance before 2028. Analyst Mislav Matejka added that it is still too early to price in an industry inflection, with fundamentals likely to remain constructive despite recent volatility.

Goldman Sachs Says Hedge Funds Pulled Back From Tech Stocks At Record Pace

According to a Bloomberg report, Goldman Sachs’ Prime Services desk stated in a note that hedge funds pulled back from US tech stocks at a record pace over the past two months. The note stated that hedge funds were net sellers in six out of the previous eight weeks.

“Amid continued volatility and sharp selloff across the semis/memory/AI infrastructure complex, the persistence and magnitude of selling since early June point to significant length reduction by tech investors, and some signs of capitulation are starting to emerge,” the firm stated in its note.

Goldman Sachs said that technology was the most net sold U.S. sector last week as investors cut long positions and added short bets. While technology hardware and IT services led the selling, semiconductors and software were also net sold.

The Invesco QQQ Trust (QQQ) is up 25% over the past 12 months, while the iShares U.S. Technology ETF (IYW) is up 35%.

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