Vivek Arya, an analyst at Bank of America, said that despite the recent increase in volatility in the semiconductor market, the industry may rebound as the fourth quarter approaches.

Arya noted that based on historical trends, the fourth quarter and first quarter are typically the strongest periods for semiconductor stocks, with average returns significantly higher than those of the S&P 500. He believes that while September is traditionally the worst month for the Philadelphia Semiconductor Index (SOX), this is just a seasonal factor and the market's seasonal headwinds may gradually subside after October.

According to Arya's analysis, the semiconductor industry is currently in the fourth quarter of the up cycle, and the Philadelphia Semiconductor Index has risen 28% since the beginning of the cycle. Historical data shows that such an upward cycle lasts an average of 10 quarters and drives the index up an average of 67%. This shows that if the cycle continues, the semiconductor industry still has significant room for growth in the future.

Overall, although the market still faces multiple uncertainties, semiconductor stocks are expected to rebound in the fourth quarter as seasonal effects subside and AI demand grows.

Arya emphasized that companies such as Nvidia (NVDA), Broadcom (AVGO) and Kelei (KLAC) have strong competitiveness in their respective end markets, making them highly optimistic in a rebound scenario.

NVIDIA, in particular, is considered the leader in the next few years due to the potential of its new generation Blackwell chips and prospects in the AI ​​field. While there remains uncertainty about the return on investment in AI, adoption of AI by businesses and countries is still in its early stages, which will continue to drive demand in the future.

Arya also reminded investors that companies such as Broadcom, Synopsys (SNPS) and Cadence Design Systems (CDNS), which have experienced market volatility in the past, may outperform amid the current backdrop of high volatility and underlying lower demand. Demonstrated stable performance.

Additionally, if the market shows stronger recovery momentum, shares of Arm Holdings (ARM), Micron Technology (MU) and ON Semiconductor (ON) may stand out.