Chipmakers are overextended. Where Josh Brown is picking his spots in the sector
(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Let’s not bury the lede. The semiconductor ETF (SMH) is now almost 50% above its 200-day moving average and an RSI of 85. If you are placing buy orders for semi stocks today, my god I hope you’re managing risk. You can do this through tight stops or small trade size. These are the most extended stocks in the most extended industry group in the entire global stock market. At this point, the fundamental drivers are incredibly well understood. We’re coasting on pure momentum and fear of missing out and that’s rarely a great entry point, I don’t care how good the story is. It’s not that I don’t think you can make more money in the chips from here. I would just be a lot more selective and deliberate about what you’re buying, how much of it and whether or not your expectations are reasonable. Because when this thing reverses – and, of course, it will — you may not be able to behave calmly and withstand the regret. We’ve shown you some monster winners in the chip space over the last year, from Lam to AMAT, Intel to KLA. Semis and Semi Equipment are the most HALO of all the technology industry groups and, in part, this is why they’ve become so popular among investors. As the uncertainty around software spending has infected Wall Street’s psyche, these companies have done nothing but raise their earnings outlooks as they describe opportunity as far as the eye can see. Here’s Sean with the usual top-level Best Stocks in the Market stats and then we’ll get into the charts of Nvidia, Broadcom, Intel and Microchip. As of April 27 , there are 187 names on The Best Stocks in the Market list. Top sector ranking: Top industries: Top 5 best stocks by relative strength: Sector spotlight: Semis There has been a total blowout in semiconductor stocks. Literally like nothing we have ever seen before. From the market bottom on March 30th, the VanEck Semiconductor ETF (SMH) is up almost 38% (as of Friday). That is better than any other rolling 18-day period since the inception of the ETF. Better than the Covid bounce, coming out of 2022, and better than the liberation day recovery. Over this 18-day period, the SMH closed higher in 17 out of 18 closes. It had one down day, down 0.4%, a literal rounding error. And to make this story even crazier, the SMH was not in a massive drawdown before this bounce! It was 15% below highs, which is not nothing, but certainly no “SAASpocalypse.” Given the recent move in semiconductors, we wanted to take a closer look at some of the names in this space on our list. Nvidia Corp. (NVDA): Sean — Starting with the biggest and baddest. Last quarter NVDA put up staggering numbers: full-year revenue of $215.9 billion, up 65% from the prior year, with their data center business alone pulling in $193.7 billion. Q4 revenue hit a record $68.1 billion, driven almost entirely by demand for their latest Blackwell chip platform. Free cash flow for the year came in at $96.6 billion. Looking ahead, they guided Q1 revenue of roughly $78 billion, which is about 80% year-over-year growth, while EPS is expected to come in at $1.77 up 120% year over year. It’s not the largest earnings contributor in the S & P 500 for nothing! Josh — NVDA has been in a relentless uptrend since early 2023, going from the low $40s to over $200 with every significant pullback getting bought back hard. The ugly 35% drawdown in mid-2025 looked alarming in the moment and turned out to be another entry point. It reclaimed the rising 50-day after that correction and has been grinding higher ever since. RSI at 65 is constructive, with firm momentum but no overbought condition. This is the most actionable setup of the group right now because the stock isn’t dangerously extended. Short-term traders can be involved here. The stock is above a rising 50-day, RSI has room before it gets stretched, and the trend is intact. Stop is a close below $176. For longer-term investors, this chart has been saying the same thing for three years: buy the dips, hold the trend. The 200-day at $150 is the line where a long-term thesis either holds or doesn’t. That’s too far away for risk management so I would use the mid $170’s recent support instead. A serious break below that level would tell you your entry was wrong and lock your downside to something manageable. Broadcom Inc. (AVGO): Sean — Broadcom makes chips for networking and data infrastructure. They build custom AI chips for the big cloud players like Google, and own VMware, which is software for running corporate IT systems. Their most recent quarter showed $19.3 billion in revenue, up 29% year over year, but the real headline was AI chip revenue more than doubling to $8.4 billion. They also returned $10.9 billion to shareholders in a single quarter. Q2 revenue of $22 billion is expected, with AI semiconductor revenue expected to grow 140% year over year to $10.7 billion. Josh — AVGO is one of the cleanest charts in the market right now. After spending most of the back half of 2025 in a messy consolidation between roughly $275 and $400, the stock broke out hard in early 2026 and never looked back. It’s now 25% above its 50-day ($341) and well clear of a 200-day ($336) that has been rising steadily throughout the entire base. The move has been impulsive and the stock is making new highs. RSI at 77 is elevated but that’s what leadership looks like, momentum confirming price rather than diverging from it. The risk for short-term traders is obvious: this thing is extended and not the right entry right now. Patient traders should be watching the $360-$370 area, former resistance turned support, for a potential retest entry. That’s where you want to be adding. For longer-term investors, the 200-day near $336 is the only level worth watching. As long as that’s rising and the stock is above it, the trend is intact. Scale in on weakness rather than chasing the current extension. I think it retests $400. Intel Corp. (INTC): Sean — Intel has come surging back, up more than 100% YTD, making it a top five stock in the S & P 500 this year. It reported earnings last week and the stock jumped 24% (its best day since October 29th, 1987). Q1 2026 revenue came in at $13.6 billion, up 7% year over year and was the sixth straight quarter beating expectations, which signals some stabilization in a business that’s had a rough few years. Their data center and AI segment grew 22% to $5.1 billion which was a major bright spot. Guidance for Q2 was $13.8 billion–$14.8 billion, with management flagging expectations for PC market weakness but continued server CPU growth. Josh — You would not be buying this stock here on technicals. It needs a minute to settle down before a reasonable person would enter for a trade. This is what happens when 20 years of disappointment comes to an end out of the blue, all of a sudden. Right now, what’s happening is a perception change. (You guys, it turns out CPUs were cool all along!). The fundamental turnaround may have years to go. But let’s be patient. INTC is the most surprising chart in this group and probably in the entire semiconductor space. The stock was essentially dead money from May through August 2025, flatlined around $20-$22 while everything else moved. Then it woke up and a near-vertical move starting in September has taken the stock from $22 to over $80, a near-4x in roughly eight months. It’s above a rising 50-day ($51) and well clear of a 200-day ($38) that is now trending higher. RSI at 82 confirms the momentum is real but also flags that you shouldn’t be buying this today. Traders looking for an entry need to wait for this to cool off. The $60-$65 zone, the breakout level from the January consolidation, is the first meaningful area to watch on a pullback. That’s a significant decline from current levels but exactly the kind of shakeout a 4x move in eight months can produce. For investors, the fundamental question is whether the business is actually turning or whether this is sentiment-driven. The technical breakout is real. Let the stock come to you rather than buying the extension. Microchip Technology, Inc. (MCHP): Sean — Microchip Technology is a bit different from the other names here; they make the small embedded chips that run industrial machinery, cars, medical devices and communications equipment. This is an internet of things play, and of course, is tied to the AI-ification of the economy. Their fiscal Q3 came in at $1.186 billion in revenue, up 4% sequentially and nearly 16% year over year. MCHP has now strung together 141 consecutive quarters of non-GAAP profitability — over 35 years without an unprofitable quarter, not bad. It guided the March quarter to roughly $1.26 billion, implying about 30% year-over-year growth, and management noted that backlog for the June quarter is already trending ahead of where March was at the same point last year. Josh — I think this one retests $80, and you will have a better crack at it. I could be wrong. MCHP is a turnaround story in progress and the chart is finally starting to confirm it. This stock was a disaster from May 2025 through the November lows near $48, losing roughly half its value in a grinding downtrend. What’s changed: the stock found a floor, built a base, crossed back above its 200-day in January, and is now ripping through the 50-day with conviction. RSI at 82 is the highest of any name in this group, which tells you the buying pressure here is intense. The gap from $65 to $73 in January is acting as support and hasn’t been filled. The elevated RSI means traders should not be chasing this print. A better entry sets up on a pullback toward the 50-day at $71 or a retest of the 200-day at $67, both of which would also give RSI time to unwind. Either level, if held with volume drying up, is where you build a position. For longer-term investors, the setup here is a business potentially inflecting at the same time the chart is reclaiming structure. Define your risk at the 200-day and let the trade breathe. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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