If you are a technology investor, especially in the semiconductor arena, it has been a very difficult year. A huge slowdown in personal computer sales, combined with currency headwinds and other issues, has made it a nightmare. In a new report, while Jefferies does not call for a full-fledged bull market in chips, the firm does think we may have finally seen, or at least be close to, a bottom.

The Jefferies team notes that although chips underperformed for the second quarter in a row, they see the group set to outperform the rest of the year and possibly into 2016, citing three huge items.

1. Estimated cuts and overall underperformance is currently more than priced into the stock at this point.
2. The supply chain is finally working its way through big inventories, and the chips may be setting up for an inventory restocking phase as revenue growth seems to have finally hit the bottom.
3. Companies’ capital expenditure and utilization cuts could lead to longer lead times and prove to be a big catalyst.

The analysts are focused on three top stocks to buy now that they think will outperform over the last half of this year and very possibly well into next year.

Avago

This company recently made big headlines with a blockbuster buyout of chip giant Broadcom. Avago Technologies Ltd. (NASDAQ: AVGO) was originally a part of Hewlett-Packard and gets a huge chunk of its business from Apple and Samsung. It is a big provider in the cloud/hyperscale data center and networking areas. In fact, the company recently announced it will demonstrate its latest optical transceiver technologies for next generation data center and enterprise storage applications. As data center networks transition to 100G speeds to support higher bandwidth demands, technical challenges emerge across various levels of the network from storage endpoints to servers to top-of-rack and core switches.

Some on Wall Street feel that the purchase of Broadcom could add as much as a whopping $14 of earnings-per-share power to the company, and that with the addition of Broadcom that the market should reward the company with a higher multiple. A higher multiple would ultimately equal a higher stock price.

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Jefferies recently moved the stock to a Buy rating from Hold and has a $179 price target. The consensus price target is $169.19. Shares closed on Tuesday at $122.24.
Intel

The Jefferies team thinks that Windows 10 and the usual seasonality could be big for this large cap leader. Intel Corp. (NASDAQ: INTC) is a top franchise pick trading very cheap at 13.46 times estimated 2015 earnings. The venerable chip leader remains the largest semiconductor company in the world and controls nearly 80% of the microprocessor market. The company continues to lower capital expenditures while working on bringing its inventory levels into adjustment.

Intel wants to be at the center of what is called the current computing revolution. The first wave of computing focused on personal computers, and then laptops, where Intel was dominant. With more and more computing becoming about the mobile revolution and connected devices like smartphones and tablets, Intel wants to boost its foothold in these areas while maintaining its leadership within servers that power data centers. If any company has the deep pockets to hold on to its strength and forge new ones, it is the Silicon Valley giant. We recently covered the company’s hot new memory chip being co-developed with Micron Technology.

Intel investors continue to be paid an outstanding 3.3% dividend. The Jefferies price target is $36, and the consensus is set at $33.34. The stock closed Tuesday at $28.91.

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NXP Semiconductors

This is considered a top play for investors looking for a chip stock with Internet of Things exposure. The NXP Semiconductors N.V. (NASDAQ: NXPI) merger with Freescale Semiconductor is ahead of schedule and was widely applauded on Wall Street, and many analyst believe the merger can transform the company into a powerhouse. The merger made NXP the fourth largest semiconductor company in the industry. It is also important to note that the combined company would be the number one supplier in auto semiconductors, number one supplier in global microcontrollers and a dominant supplier in mobile payments.

The company recently unveiled the industry’s most complete USB Type-C solution, including authentication and power delivery capabilities to further deliver secure connections. The authentication capabilities can be used to validate a device and determine whether specific functionality of that device should be enabled. This will maximize battery life and could prevent safety hazards or equipment damage from low quality materials or non-compliant products. For example, detecting counterfeit power supplies before they are used for rapid charging functions.

NXP is getting its chips into high-growth areas such as contact-less mobile payments, the Internet of Things, mobile-phone charging, increased cellular data consumption and LED lighting. The two business segments that cover these products grew 39% and 29% year over year, very impressive numbers. With a diversified product base, the stock remains a solid buy, albeit a touch pricey compared to others.

The Jefferies price target is $116, but the consensus target is $120.33. The stock closed Tuesday at $88.34.

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While not as contrarian as energy or gold, the chip sector has had a very tough go of it so far in 2015. For tech investors looking to take profits from other momentum technology areas and redeploy, this may be the perfect place to look to reset capital.

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