3 Beaten-Down AI Chip Stocks Worth Buying in the Selloff — Nvidia at 29x Is Below Its Historical Average

The Quick Take

• Nvidia (NVDA), AMD, and at least one other major AI chip company now trade well below their recent highs following a sector-wide selloff that affected the best names alongside the worst
• Nvidia at approximately 29x earnings — below its historical average valuation — represents a potential entry point for investors who believe the AI infrastructure buildout remains intact
• Sector selloffs create opportunities to buy quality AI chip names at discounts that typically close when earnings data confirms the demand trajectory is uninterrupted

A market analyst at Nasdaq/Motley Fool has identified three beaten-down AI chip stocks worth considering following a sector-wide selloff. The analysis focuses on Nvidia, which the analyst notes is trading at approximately 29 times earnings — meaningfully below its average valuation over the past year. This valuation compression is the result of a broad sector selloff that pulled down AI chip stocks indiscriminately, affecting premium franchises like Nvidia alongside lower-quality names. The analyst's argument is that market selloffs that treat all names in a sector equally create temporary mispricings that attentive investors can exploit.

The three AI chip opportunities identified reflect different parts of the semiconductor supply chain serving AI demand. Nvidia's case rests on the combination of below-average valuation and unchanged fundamental demand from hyperscaler data center buildout — Microsoft, Amazon, Google, and Meta continue to announce massive AI infrastructure investment plans that require Nvidia's H100/H200/Blackwell GPU generations in large volumes. The selloff appears to have been driven by profit-taking and macro concerns rather than any negative data on actual AI chip shipment volumes or Nvidia customer commitments. At 29x earnings vs. 35-40x average, there is a genuine valuation case even for a momentum-driven growth stock.

Beyond Nvidia, the beaten-down AI chip thesis typically extends to companies like AMD (second-largest discrete GPU maker, growing market share in data center AI with MI300 series chips) and Broadcom (AVGO, which designs custom AI accelerator chips for hyperscaler customers like Google and Meta). A sector selloff that creates entry points across the supply chain — GPUs, networking chips, custom ASICs — allows investors to build diversified AI infrastructure exposure rather than concentrating in Nvidia alone. The critical forward signal is upcoming Nvidia and AMD quarterly results, which will confirm or deny whether the AI data center spending wave remains on track.

Synthesized from 2 sources.