Chip Sell-Off Creates Buying Opportunity in Alphabet, Amazon, TSMC—Not Nvidia

Chip stocks have fallen sharply in recent weeks as investors take profits after years of gains, sparked by concerns about high spending levels, lofty valuations, and the possibility that the AI supercycle may be ending. However, an analyst writing for Yahoo Finance argues that this sell-off presents a buying opportunity in three companies better positioned than Nvidia, the sector's most famous name.

Alphabet, the parent of Google, has slumped to its cheapest level in over a decade despite impressive fundamentals. In the second quarter, revenue grew 24% year over year, while cloud revenue surged 82%. Operating income climbed 30%. The market punished the stock over Alphabet's $205 billion（約33兆円） AI spending guidance for the year—higher than Amazon's $200 billion（約32兆円） budget—but the analyst sees that spend as justified by results. Alphabet has a cloud backlog of $514 billion（約82兆円）, 2.4 million users on its Antigravity agentic AI development platform, and 90% of Fortune 100 companies rely on its Gemini Enterprise platform. A 40% jump in daily active video users followed an app upgrade in May. The stock trades at 16 times trailing 12-month earnings, making it attractive relative to history. The analyst also credits Alphabet's diversified revenue model: its Tensor Processing Units (TPU) chip business exists within a broader AI strategy, which in turn is only one piece of a tech empire including search, YouTube, and Android.

Amazon faces similar skepticism about whether its heavy infrastructure spending will pay off, pushing its stock to lag the S&P 500 this year. Yet CEO Andy Jassy revealed that Amazon's chip business operates at a $50 billion（約8兆円） run rate and ranks among the world's three largest chip manufacturers. In Q2, revenue rose 17% year over year, while cloud revenue climbed 28%—the highest growth in 15 quarters. Like Alphabet, Amazon operates e-commerce and streaming businesses alongside chips and AI, insulating the stock from volatility in any single segment. At 28 times trailing earnings, Amazon trades near a 10-year low.

Taiwan Semiconductor Manufacturing (TSMC), which manufactures chips designed by Nvidia, Alphabet, Amazon, and other top firms, posted a 34% year-over-year sales increase in Q2 and saw operating margins expand from 49.6% to 60.3%. The company is racing to add capacity, recently opening a plant in Arizona where it expects to invest $265 billion（約42兆円） and raising its annual capital expenditure guidance as demand from all clients accelerates. Although TSMC's growth is currently driven by the AI supercycle, its client diversity and role as an essential supplier insulate it from AI-specific downturns. Management says it does not anticipate bottlenecks for the next few years. The stock fell after the recent earnings report and trades at a 29 P/E ratio, which the analyst considers a fair premium for TSMC's model.

The chip sector faces a typical cyclical downturn as investors fear the end of an AI supercycle and recoil from high valuations. However, the analyst argues that not all chip stocks respond equally to sell-offs, and three companies stand out for their resilience: those with diversified revenue streams beyond semiconductors. Alphabet and Amazon both generate substantial income from cloud services, search, e-commerce, and other businesses, reducing their exposure to AI volatility. TSMC occupies a unique position as a foundry serving multiple clients—including Nvidia, Alphabet, and Amazon themselves—which limits its dependence on any single trend. The analyst's valuations support the case: Alphabet at 16 times trailing earnings and Amazon at 28 times are near or at multi-year lows, while TSMC trades at a 29 P/E ratio the analyst deems justifiable given its model. All three companies reported strong Q2 results—double-digit revenue growth, cloud acceleration, and expanding margins—indicating that their heavy spending on infrastructure and AI is beginning to demonstrate returns.

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