The Zhixun Finance and Economics app learned that US semiconductor stocks suffered a sell-off on Wednesday, with a market cap evaporating more than $500 billion. Two Wall Street research firms said volatility may continue, but fundamentals are still sound.

Citigroup analyst Atif Malik, who focuses on the semiconductor equipment market, said stocks such as Applied Materials (AMAT.US), Lam Research (LRCX.US), and KLA (KLAC.US) fell sharply, possibly due to ASML Holding (ASML.US) third-quarter guidance falling short of expectations, as well as Trump's comments on Taiwan exacerbating concerns about chip export controls.

However, chip equipment spending should not be affected, with a basic forecast of $120 billion in 2025.

Vivek Arya, an analyst at Bank of America, said that Wednesday's decline was the 26th time the Philadelphia Semiconductor Index had fallen 5% or more over the past decade. Although these risks exacerbated seasonal headwinds - the index tended to perform poorly in the third quarter - volatility was not new, and the fundamentals remained solid.

Arya wrote in the report, “Artificial intelligence remains the strongest and most reliable area of capital expenditure, driven by US technology companies that have robust balance sheets, mature monetization, and critical mission requirements. Our recent conversations with Broadcom (AVGO.US) management indicate that top US cloud computing customers have a 3-5 year planning window.”

“However, outside of the AI field, global growth remains uncertain - global consumers are constrained by inflation and global conflict, limiting any major PC/smartphone upgrade cycle, while enterprise demand remains sluggish, telecom demand is weak, and industrial demand is more due to inventory adjustments rather than new capital spending cycles, and auto production is flat due to uncertainty about demand for electric vehicles.”

Therefore, Arya said that the recent volatility in semiconductor stocks may be more related to positions rather than fundamental factors.

In addition, Arya said that Taiwan is "irreplaceable" for at least the next five years, and pointed out that the global chip industry "heavily relies on the global supply chain."

The chip stocks favored by Bank of America in the computing and AI fields are Nvidia (NVDA.US), Broadcom, Arm (ARM.US), while in the semiconductor equipment field, KLA is favored, and in the automotive and industrial fields, ON Semiconductor (ON.US) and Analog Devices (ADI.US) are favored. Bank of America is also bullish on chip stocks such as ON Semiconductor, Micron Technology (MU.US), Camtek (CAMT.US), and Nova (NVMI.US).

Arya added: "It's important to note that we're still only in the third quarter of the typical 10-quarter turnaround cycle for the semiconductor industry."

The Philadelphia Semiconductor Index closed up 0.51% on Thursday after falling 6.8% on Wednesday.