The chip sector has seen share prices falling in recent weeks and as a result, a lot of investors – myself included – are looking for stocks to buy at ‘bargain’ prices. If the AI boom continues in the years ahead, investing in semiconductors now could potentially be very lucrative.
Here, I’m going to highlight three top chip stocks that have fallen 25% or more from their 2026 highs. Could they be worth considering for an ISA or SIPP?
Broadcom
Let’s start with Broadcom (NASDAQ: AVGO). This is one I see as a real quality chip stock – a ‘blue-chip’ in fact.
It makes custom AI chips for the likes of Google, Meta, and Anthropic. It also offers solutions in areas such as data centre networking and infrastructure software.
Now, this company is growing rapidly. This financial year, for example, revenue is expected to jump 66% year on year.
It’s priced very reasonably, however. Looking at the earnings forecast for the financial year starting 1 November, the forward-looking price-to-earnings (P/E) ratio is under 20.
Customer concentration is a risk. If Google or Meta pulls the pin on the company’s custom chips, revenue growth could slow.
With the stock trading around 25% its highs though, I reckon it’s worth a look. The average analyst price target is $510 – 38% above the current share price.
Applied Materials
Next we have Applied Materials (NASDAQ: AMAT). It’s one of the biggest players in the chip manufacturing equipment space.
Its share price has taken a huge hit this month as momentum stocks have lost steam. Currently, it can be snapped up for around $530 – about 28% below its 2026 highs.
I see this stock as a ‘picks-and-shovels’ play on the AI boom. As chip manufacturers like Taiwan Semi and Intel expand their production, this company should see strong momentum.
Note that growth forecasts look attractive. Next financial year, analysts expect top-line growth of 28%.
Of course, if there’s a major slowdown in chip spending, it may underperform. Ultimately, its revenue is dependent on the capex budgets of a small number of manufacturers.
Taking a long-term view, however, I see a lot of potential so I believe it’s worth considering. The P/E ratio using next year’s earnings forecast is 32 which is high but not crazy.
Micron
Finally, Micron (NASDAQ: MU) could be worth a look as a more speculative play on chips. It specialises in memory, which is becoming a really important component as generative AI models need it to store, process, and access data.
This company is seeing spectacular growth at the moment. This financial year (ending 31 August), revenue is expected to more than triple.
Now, demand for memory is cyclical and I don’t expect this level of top-line growth to last forever. However, with tech companies forecast to spend over a trillion dollars on AI infrastructure next year, growth could remain strong for a while.
It’s worth noting that the company is locking in long-term contracts with buyers. This reduces risk a little.
The P/E ratio here is only around 12. So the stock – which some analysts see hitting $1,500 – looks cheap today.
That said, if demand for memory suddenly drops or supply catches up with demand, Micron’s earnings could fall. So, with this name, risk needs to be managed carefully.
Should you invest £5,000 in Micron Technology right now?
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Edward Sheldon owns shares in Broadcom and Micron
This story originally appeared on Motley Fool
