Recently, large-cap tech stocks have faltered, as investors pivot away from the artificial intelligence (AI) giants that have set the pace for the market’s rally over the past year. The rotation into small-cap stocks and cyclical sectors comes amid rising expectations for Fed rate cuts and an economic “soft landing,” and many analysts point to the increasing breadth as a sign of a healthy market.
With Big Tech stocks under particular selling pressure in recent weeks, the tech-heavy Nasdaq 100-Index ($IUXX) closed Tuesday’s session down more than 9% from its July highs - and individual heavyweights within the index have corrected by even more from their recent peaks.
With some quality tech stocks now starting to look like a relative bargain, here are five Nasdaq-100 components to consider buying on the dip.
Nasdaq-100 Stock #1: ASML Holding
With a market cap of $339.4 billion, Netherlands-based ASML Holding N.V. (ASML) stands out as a global leader in advanced technology systems for the semiconductor industry, offering an integrated portfolio for the production of complex integrated circuits. The company excels in designing, developing, integrating, marketing, and servicing sophisticated systems used by major semiconductor manufacturers to produce chips that drive a wide range of electronic, communications, and IT products.
Shares of ASML Holding plunged 12.7% on July 17 following the company's Q2 earnings report, which highlighted a revenue decline amid geopolitical tensions, including restrictions on sales to China and uncertainties surrounding Taiwan.
The stock is bouncing back today amid better news from the Biden administration, but ASML is still down about 22% from its recent highs.
Analysts maintain a consensus rating of “Strong Buy” on ASML stock, with a mean target price of $1,154.75. This indicates expected upside potential of about 23.2% from current levels. Out of 18 analysts covering the stock, 15 advise a “Strong Buy” rating, and the remaining three have a “Hold” rating.
Nasdaq-100 Stock #2: Advanced Micro Devices
Valued at a market cap of about $223.8 billion, Santa Clara-based Advanced Micro Devices, Inc. (AMD) stands out for its broad range of high-performance and adaptive processor technologies. From CPUs and GPUs to FPGAs and Adaptive SoCs, AMD's extensive portfolio and software expertise solidify its status as a tech industry leader.
At the Computex 2024 show in June, AMD introduced the MI325X AI accelerator, set to launch in Q4 of fiscal 2024. Featuring 288GB of HBM3E memory, this chip is intended to compete directly with Nvidia (NVDA).
Shares of AMD are surging today, up 4% on well-received Q2 earnings. The stock is still down about 39% from its March highs, allowing investors to buy the dip on this AI chip giant.
AMD stock has a consensus "Strong Buy" rating overall. Out of 35 analysts covering Advanced Micro Devices, 28 recommend a "Strong Buy," one advises “Moderate Buy,” and the remaining six have a "Hold" rating. The mean price target of $197.78 implies expected upside of 37% from current levels.
Nasdaq-100 Stock #3: Qualcomm
With a market cap of $186.3 billion, California-based Qualcomm Incorporated (QCOM) develops and commercializes core technologies for the global wireless industry. Famous for its Snapdragon processors, the chip giant delivers cutting-edge on-device 5G and AI innovations. Additionally, Qualcomm generates revenue through licensing its extensive portfolio of intellectual property.
Qualcomm shares have pulled back about 27% from their early June record highs, even as the stock rallies sharply alongside its semiconductor peers today - setting the stage for a potentially volatile post-earnings reaction in QCOM after tonight’s close.
Overall, QCOM stock has a consensus "Moderate Buy" rating on Wall Street. Out of 29 analysts in coverage, 17 recommend a "Strong Buy," one advises a “Moderate Buy,” 10 suggest a “Hold,” and one backs a "Strong Sell" rating. The mean price target of $206.45 implies a potential upside of 16.8%.
Nasdaq-100 Stock #4: Cadence Design Systems
San Jose-based Cadence Design Systems, Inc. (CDNS) is a trailblazer in electronic systems design, leveraging over 30 years of expertise in computational software. With its Intelligent System Design strategy, Cadence transforms innovative concepts into reality through cutting-edge software, hardware, and IP.
Serving some of the world's most forward-thinking companies, Cadence supports diverse industries, from hyperscale computing and 5G communications to automotive, aerospace, and life sciences.
Valued at $68.9 billion by market cap, CDNS stock is down by about 23% from June’s all-time high.
Overall, CDNS stock has a consensus "Strong Buy" rating. Out of 13 analysts covering the stock, nine recommend a "Strong Buy," one advises a “Moderate Buy,” and the remaining three have a "Hold" rating. The mean price target of $329.92 implies a potential upside of 23% from current price levels.
Nasdaq-100 Stock #5: Constellation Energy Corporation
Headquartered in Baltimore, Constellation Energy Corporation (CEG) is one of the nation’s largest producers of clean, carbon-free energy. Dominating the domestic energy market, Constellation supplies power to businesses, homes, and public entities, including three-quarters of Fortune 100 companies.
With nearly 90% of its output carbon-free, its hydro, wind, and solar facilities, along with the largest nuclear fleet in the country, power 16 million homes and contribute about 10% of the nation’s clean energy. The company is scheduled to release its fiscal Q2 earnings results before the market opens on Tuesday, Aug. 6.
With a market cap of around $53.1 billion, shares of Constellation have pulled back about 19% from May’s all-time high.
Overall, CEG stock has a consensus "Moderate Buy" rating. Out of 13 analysts, nine recommend a "Strong Buy," and the remaining four maintain a "Hold" rating. The mean price target of $233.54 implies expected upside potential of 22.8% from the current price levels.
