Semiconductor stocks remained under pressure on Wednesday as investors continued to pull back from the sector, extending a multi-day sell-off driven by concerns over artificial intelligence spending and growing competition from China.
Intel INTC shares fell 2.2%, marking their sixth consecutive session of losses, while Advanced Micro Devices (AMD) dropped 3.3%, extending its losing streak to five sessions.
The broader semiconductor sector has now fallen for four straight sessions, leaving chip stocks down about 10% for the week.
The decline comes as investors increasingly question whether the billions of dollars being invested in AI infrastructure will generate sufficient returns, while also monitoring intensifying competition from Chinese chipmakers.
Despite the recent weakness, some analysts argue that the correction reflects changing market sentiment rather than deteriorating industry fundamentals.
Truist sees buying opportunity as AI demand stays strong
Truist Securities said the recent decline presents an opportunity for long-term investors, citing encouraging feedback from industry contacts despite the Philadelphia Semiconductor Index falling 25% from its June 22 peak.
“Feedback remains effervescent, so we continue our positive view on semis.
Favor core AI suppliers for long-term growth; favor ‘fragile’ suppliers for near- term fundamental performance & undemanding valuation,” analyst William Stein wrote.
According to Truist, buyers of AI infrastructure are becoming increasingly willing to place larger purchase orders with longer contract durations than in previous years, suggesting demand remains healthy across the supply chain.
“We acknowledge this situation can change quickly, but for now, supply chain signals remain effervescent,” Stein added.
For investors with a higher tolerance for risk, Truist recommends core AI suppliers including Nvidia, AMD, Broadcom and Monolithic Power Systems.
For lower-risk exposure, the firm prefers Arrow Electronics, Avnet, Belden and Sensata Technologies.
AMD valuation concerns and Intel turnaround remain in focus
Not all analysts share the optimistic outlook.
Seeking Alpha maintained a Sell rating on AMD, arguing that the stock’s valuation has become difficult to justify despite strong operating performance.
The analysis noted that AMD reported 37.8% revenue growth and 253% free cash flow growth during the first quarter of fiscal 2026.
However, it said the company’s valuation multiples, including a price-to-earnings ratio of 181 times and a price-to-free-cash-flow ratio of 106 times, imply growth expectations that may be difficult to sustain.
The report also argued that analyst forecasts require AMD to expand its bottom line by roughly 32% annually for a decade, while highlighting risks in both its Client and Gaming business and its Data Center segment amid concerns that AI demand expectations may prove overly optimistic.
Intel, meanwhile, continues to face pressure related to its multi-year turnaround strategy.
Investor concerns have intensified following reports that the rollout of the company’s 18A process technology is progressing more slowly than expected.
Lower-than-target manufacturing yields could delay high-volume production for external foundry customers and weigh on Intel’s long-term efforts to regain process leadership.
The uncertainty surrounding its foundry business has added to investor caution as the broader semiconductor sector remains under pressure.
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