Advanced Micro Devices was pulling back on Tuesday, though it still has easily topped the S&P 500 and tech sector so far this year. The semis stock has also surged 37 percent in August alone. Applied Materials, meanwhile, has dropped 11 percent this month in what could be its worst performance since April 2015.
Wald expects that divergence to continue.
AMD "has had a terrific run," Wald said. "Our strategy is based on letting your winners run, and this is a winner, so if you're in the stock there's nothing to do. Very little resistance to point to until this stock gets back to $40."
AMD last traded above $40 in early 2006. It had a more extended stretch during its highs of the dotcom bubble in mid-2000.
"Applied Materials, on the other hand, had already rallied to its 2000 high last year. Now it's getting turned lower here. The trend is broken," he explained. "If the market continues to be strong, which we think it does, I think there's a floor here, but if the market were proved wrong there I think there is additional downside risk given the broken trend. So stay away from that one."
Applied Materials broke above its 2000 highs late last year and added to those gains in early 2018. It last hit an all-time high of $62.40 a share in March this year. It has dropped 31 percent since then.
Michael Bapis, managing director of The Bapis Group at HighTower Advisors, says the surge in AMD has become overdone and he expects the tide to turn on these two names.
"AMD needs to take a break. It's been a three-bagger since April, and so we're recommending you swap out of AMD and into AMAT," Bapis said on "Trading Nation" on Monday. "We think over the next 12 to 18 months you'll be way better off in AMAT than you will in AMD.
Chips stocks declined on Tuesday. AMD fell more than 4 percent, and Applied Materials dropped more than 1 percent. The SOXX semiconductor ETF was also lower.