While the better part of 2022 through 2024 was dominated by the technology sector, mainly centered around the semiconductor and chip maker names in the market, 2025 is getting off to a rough start for this space. After Chinese company DeepSeek made it the number one downloaded app in the world, claiming it has more computing power with a fraction of the costs claimed by the industry, technology names have taken a beating.
Leading the sell-off is NVIDIA Co. (NASDAQ: NVDA), as its shares sold off by over 14% in a single day, erasing billions in value for its shareholders and the broader Nasdaq-100 index. More than that, it looks like the systemic volatility spikes might keep driving capital out of this stock and initiating a rotation into other – better – risk-to-reward setups in the space.
This is where today’s list of stocks comes into play, as names like ASML Holding (NASDAQ: ASML), Adobe Inc. (NASDAQ: ADBE), and even Advanced Micro Devices Inc. (NASDAQ: AMD) make up some of the best upside potential in the technology space today, not to mention discounts so attractive that so far they’ve been protected in the recent sell-offs, but that’s only one of the many reasons to keep an eye on them.
Institutional Buyers Chose ASML Stock This Month
As of January 2025, a few willing buyers were looking to take advantage of ASML stock’s low price today. To gain perspective, investors can note that this company trades at 60% of its 52-week high today, an irresistible discount for those willing to bet against the short-term trend.
For example, Country Trust Bank decided to boost its holdings in ASML stock by as much as 4.8% to bring its net position to a high of $54.7 million today. Similarly, Chicago Capital and Vantage Investment Partners accumulated respective stakes worth $43.2 and $36.9 million in ASML stock as of January 2025.
These buyers weren’t the only ones willing to express their optimism in ASML stock, however, as some Wall Street analysts made—and kept—a bold, bullish view as of October 2024. J.P. Morgan analysts have not changed their Overweight rating on ASML stock, nor has the $1,148 a share valuation moved, which can be a good sign.
With this view in mind, investors can imply a net upside of as much as 68.3% from today’s low price. More than that, while NVIDIA stock is down over 14% in a single day, ASML has managed to contain its losses within 7%, showing investors the benefit of a better risk-to-reward ratio.
Adobe’s Defensive Nature Will Glow
While the market’s excitement for high-flying stocks drives it away from defensive and stable names, recent volatility might favor a rotation into safer business models. With DeepSeek looking to challenge the current artificial intelligence landscape, one thing remains certain for Adobe.
It holds a close monopoly in content creation and today's digital economy. With more and more business happening online, marketing needs are blasting to a higher ceiling, making Adobe’s suit of products a must-have for most online workers today. This is why management decided to flip the business model into a subscription-based one.
This creates a more stable and predictable financial outlook for Adobe, reducing its potential volatility. As a result, the stock is up 2.2% on a day when most technology stocks are taking a hit. However, stability is not the only benefit awaiting investors.
Wells Fargo analysts, with their $640 a share price target on Adobe stock, are calling for a potential upside of 44% from today’s price, which makes all the sense in the world today.
A Better Semiconductor Profile in Advanced Micro Devices
Like ASML, Advanced Micro Devices is a stock that should—in theory—be punished just as badly as NVIDIA in the DeepSeek sell-off. However, this name has also managed to keep its losses at less than half of NVIDIA’s daily 14% decline, which says a lot about market perception and sentiment.
More than that, Wall Street analysts agree on the discrepancy between Advanced Micro Devices and NVIDIA, as witnessed by their price targets. While the consensus for Advanced Micro Devices is $176.3 a share for a 53.3% upside, NVIDIA’s consensus target of $165.2 only calls for a 37.8% upside, another gauge for investors to consider moving forward.
All told, there is also a reason for markets to pay a 110.0x price-to-earnings (P/E) ratio for Advanced Micro Devices stock today, which is a massive premium next to NVIDIA’s 56.1x.
Some would argue that NVIDIA is more attractive; others will understand that the market always pays a premium for the stocks it believes will outperform, making Advanced Micro Devices a worthy addition to a technology sell-off watchlist today.
