The S&P 500 hit a record high last week, but the article warns of risks from rising inflation, possible interest rate hikes and volatility in AI stocks, noting its Shiller CAPE ratio of 41.8 is its second-highest ever, behind only the 2000 dot-com peak. The author does not predict a decline of that size but considers a sell-off increasingly likely, and suggests two stocks could be bought at a discount if the market falls. Cohu (COHU) supplies testing and handling equipment for AI chips to Taiwan Semi, Intel and Samsung; Wall Street expects its 2026 revenue to rise 35% to $612 million, and its AI sales pipeline was worth $850 million as of June 30. The stock has soared 180% this year and trades at a forward P/E of 34.5, versus 22.1 for the Nasdaq-100. Upstart (UPST) uses AI to assess borrowers and earns fees for originating loans for banks; in the second quarter, it approved 558,014 loans worth $4.2 billion, up 50% year over year, and revenue rose 42% to $364.7 million.
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The S&P 500 trades at a Shiller CAPE ratio of 41.8, its second-highest valuation ever behind the peak of the 2000 dot-com bubble, and rising inflation, interest rate hikes and AI-stock volatility could set the stage for a steep correction. The author argues a downturn would likely be a buying opportunity and highlights two stocks. Cohu (NASDAQ: COHU) supplies testing and handling equipment for AI chips, with 2026 revenue expected to rise 35% to $612 million, and its stock has soared 180% this year, trading at a forward P/E of 34.5 versus 22.1 for the Nasdaq-100. Upstart Holdings (NASDAQ: UPST) uses AI to assess borrowers, approving 558,014 loans worth $4.2 billion in the second quarter, up 50% year over year. The author suggests investors could wait for a market correction, and that a 20% to 30% drop in Cohu's stock could make it a great long-term buy.
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- TSMC Revenue Growth Accelerated Faster Than Expected Last Quarter. Here's Why It's My Top AI Chip Stock to Buy.
TSMC's September sales reached NT512 billion, up 55% year over year, and third-quarter sales hit NT1.49 trillion, up 51%. At 32 NTD to USD, Q3 revenue is about $46.7 billion, up 41% from a year earlier and accelerating from 34% growth in Q2, above both analysts' expectations and the company's own forecast of $44.6 to $45.8 billion. The article attributes the growth to strong AI chip demand, a faster ramp of 2nm production, price increases, and expanded capacity, including new facilities in Arizona. It notes the stock trades at 27 times earnings, while management's target is 25% average annualized sales growth for 2024 to 2029, a goal it is well ahead of.
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