Phil Rosen
July 17, 2026
Why Chip Stocks Are a Strong Buy Despite Market Volatility
TL;DR
A strategist argues chip stocks are worth buying during dips because while stock prices are volatile, underlying demand for chips is stable and growing, with earnings expected to rise long-term.
Key Takeaways
- 1Chip stock prices are volatile, but demand for chips is remarkably stable with only two years of consecutive declines in history (2008 and 2020)
- 2Chip sector fundamentals are strong: increasing volumes, rising margins, and expanding use cases all point to future earnings growth
- 3Rather than trying to pick individual chip stock winners, investors should buy a diversified basket of chip companies to capture sector growth
Notable Quotes
“everyone thinks in their mind that chip stock investments are always volatile, and I would say that's correct. The prices of the stocks are volatile, but there's no volatility in demand for chips.”
— Strategist
“I say screw that whole debate and just buy them all. Buy the basket.”
— Strategist
Chapters
1. The Volatility Misconception
Stock prices in the chip sector are volatile, but this masks the reality of stable and consistent demand for chips across all categories, not just AI chips.
2. Historical Demand Stability
Annual chip volumes have only declined year-over-year twice in history: during the Great Financial Crisis and COVID pandemic, demonstrating exceptional long-term demand resilience.
3. Fundamental Growth Drivers
The chip sector benefits from increasing sales volumes, expanding profit margins, and growing use cases, creating a compelling foundation for future earnings growth.
4. Investment Strategy: Buy the Basket
Rather than debating which individual chip stocks are most undervalued, investors should purchase a diversified portfolio of chip companies to participate in sector growth.
Key People & Entities
- Micron
- Major semiconductor company mentioned as example of chip stock investment
Glossary
- AI chips
- Specialized semiconductor chips designed for artificial intelligence applications and processing
- Chip sector margins
- The profitability measure for chip manufacturers, indicating the percentage of revenue retained as profit after expenses