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Goldman Sachs is searching the wreckage of the artificial intelligence stock selloff for bargains, and its semiconductor analyst says the punishment has gone far enough. The firm sees a buying opportunity in selected chip names after a brutal month for the sector.

"We believe stocks are now clearly in oversold territory," Goldman Sachs analyst James Schneider said about semiconductor stocks. His three leading names to buy are Nvidia, Broadcom, and AMD.

Schneider identified Nvidia under the ticker NVDA, Broadcom under AVGO, and AMD under AMD. His analysis separates the three companies by valuation and expected growth, while still placing each among his preferred purchases.

"Even in a 'no growth' scenario for 2028 (which we see as relatively unlikely), NVDA/AVGO are trading 12X/13X this baseline — which we believe valuations are compelling at current levels," Schneider wrote in a note. "We find AMD to be very attractive given the growth we believe it can achieve, albeit at a less compelling valuation."

That distinction puts Nvidia and Broadcom in the more compelling valuation camp under Schneider’s 2028 baseline. AMD remains attractive in his view because of the growth he believes the company can achieve, though he sees its valuation as less compelling.

The call arrives after an unforgiving November for technology stocks. Semiconductor companies have remained under particular pressure as investors weigh questions about artificial intelligence spending and the construction of data centers.

The S&P 500 lost 4.3% of its market value on Nov. 5. That single session erased $3 trillion in value as investors considered what a blue wave on Election Day could mean for the expansion of AI data centers.

The damage spread across the major indexes. The Dow Jones Industrial Average plunged 1,800 points in its worst single day rout since 2020, while the technology focused Nasdaq cratered 5.5%.

Semiconductor and cloud giants helped drag the Nasdaq lower during the decline. Micron and Sandisk were among the companies identified as major contributors to that drop.

Pressure on stocks continued after the Nov. 5 rout, with trading retaining a downward bias. Semiconductor names remained especially vulnerable as the market worked through concerns surrounding the pace and financing of AI infrastructure.

The Philadelphia Semiconductor Index has fallen 21% during the past month. It is also down 6% in November alone, illustrating the scale of the retreat behind Goldman Sachs’ oversold assessment.

Schneider said investors are wrestling with competing tensions around semiconductor companies. One involves the gap between current capital expenditures and free cash flows for hyperscalers and AI model labs.

The financing question centers on how that gap will be closed. It reflects the market’s focus on whether current spending levels can be supported by the free cash flows available to the companies and laboratories driving artificial intelligence development.

A second concern involves the physical infrastructure needed to meet Wall Street’s semiconductor estimates. Schneider pointed to the availability of land, power, and shells required to support the expected pace of data center construction.

"Following the US elections on Nov. 3, the second of these tensions came into greater focus with greater uncertainty around the pace of datacenter builds in states such as Texas." That uncertainty contributed to the scrutiny facing semiconductor stocks after the elections.

Schneider does not expect an immediate flood of positive triggers for the sector before the calendar turns. He added, "[Although] we recognize there may be few catalysts for stocks to move higher before year end, we think risk/reward is compelling for select names at current levels."

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.