Semiconductor stocks have been a source of massive gains in the early days of the artificial intelligence (AI) boom. With more focus placed on other names, specifically those in the software scene, questions linger as to which direction the stalling semiconductor stocks will be headed next. Even the great Nvidia (NASDAQ:NVDA) is stuck, with shares having done nothing in six months — quite rare for what used to be the most explosive hyper-growth sensation in the market.

Perhaps the DeepSeek overhang could plague the semiconductor firms for a while longer as cautious investors await coming quarters for more clarity on how things will play out and whether the rise of more efficient locally-run models will impact demand for AI accelerators. While DeepSeek does certainly provide food for deep thought, I still think the shifting of the gears from training to inference and brute-force power to efficiency has the puck headed in the direction of ASICs and AI compute on the edge.

There’s plenty of value in the semiconductor scene

For semi investors, perhaps this means a name like Broadcom (NASDAQ:AVGO) could fare better than Nvidia moving forward. In any case, there’s no denying the wave of uncertainty facing demand for AI accelerators. Where there are setbacks for some firms, there are sure to be opportunities for others.

Perhaps it’s more about where hyperscalers and Mag Seven spenders are allocating their resources than how much they’re putting up. For now, data centers and more efficient application-specific custom silicon are still the places to invest.

In this piece, we’ll look at a pair of slumping semi stocks that I think are spending in the right places.

AMD

Advanced Micro Devices (NASDAQ:AMD) stock is in a major slump, now down a whopping 31% in the past six months and just over 50% from all-time highs. Indeed, the distant runner-up in the GPU race seems to be witnessing the widening gap between itself and Nvidia.

While paying a lower price of admission for the number-two GPU juggernaut has proven less rewarding in recent years, I do think that AMD’s strengths are being heavily discounted. As Nvidia drags and AMD looks to reverse course, perhaps AMD will finally have a shot to outdo its biggest rival. Growth in the data center remains still robust. And it could stay that way despite DeepSeek and the rise of cheaper, more efficient models that could take away from GPU demand in the medium term.

Though it’s doubtful that AMD will experience a growth spurt to the magnitude that Nvidia enjoyed, I do view AMD’s GPU as promising in its own right. Furthermore, AMD stock looks incredibly cheap after its 50% share price haircut, now going for close to 23.0 times forward price-to-earnings (P/E) — cheap enough for one insider to buy a few thousand shares.

Lam Research

Lam Research (NASDAQ:LRCX) is another one of the bargains fit for those seeking value in the semiconductors after its latest slip. The stock is now down 29% from its all-time highs and up just 11% from its late-2021 peak. The semi-machinery maker could stay weighed down if AI-driven demand begins to fade over the near term.

In any case, Lam seems to have its sights set on the long term. The company recently pulled the curtain on some intriguing innovations, including ALTUS Halo and Akara, which are very novel innovations that stand to further widen the semi equipment maker’s moat.

At 21.9 times forward P/E, Lam Research certainly stands out as a misunderstood value name in the semi scene, one that will play a huge role in the next chapters of the AI chip race. As Lam readies for the next generation in semiconductors, perhaps Lam is well on its way to hitting (or even smashing) its fresh 2028 financial targets, which were recently revealed at its Investor Day.

The firm is shooting for $26 billion in revenue, entailing a 13% compound annual growth rate (CAGR). I don’t expect DeepSeek and the rise of efficient models to weigh on the firm’s ability to hit its milestones. In fact, demand for efficient chips may actually be a boon for Lam, given that more-tailored, complex chips could beget demand for the latest and greatest wafer-fabrication equipment.

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