Nvidia and two other chip names could be a buy amid the big tech volatility

Semiconductor stocks took a hit Friday amid a sweeping technology rout, but were still on track for their best week in more than two years.

Some market watchers say there are a few select stocks that could be worth a buy if investors are cautious about putting fresh money to work.

"These chips are not a place where we want to have broad exposure. We're actually high-conviction underweight. And quite frankly, this isn't a place you'd want to hide in a trade war, since 90 percent of the sector's revenues come from overseas, which is higher than any other sector," Mark Tepper, president and CEO of Strategic Wealth Partners, said Thursday on CNBC's "Trading Nation."

Tepper is of the mind that the group as a whole has gotten far ahead of itself, rallying 76 percent in the last three years. But he's bullish on a select few names like Nvidia for its exposure to the gaming industry specifically. That stock is up a whopping 650 percent in three years, but has plunged 25 percent in the past month.

Semiconductor stocks have indeed gotten trapped in the U.S.-China trade war's crosshairs, and other headwinds plague the industry. Shares of Advanced Micro Devices, for example, plunged last month after the company reported revenue guidance that fell below Wall Street's estimates.

Other strategists agree that investors may want to play the semiconductor space highly selectively, rather than buying up a broad vehicle like the semiconductor-tracking SMH ETF.

Two names investors might consider are Taiwan Semiconductor and Marvell, said Stacey Gilbert, head of derivative strategy at Susquehanna, pointing to the firm's equity analysts' recommendations.

"This is certainly not a sector-based trade. In fact, our analysts Mehdi Hosseini and Chris Rolland are still certainly cautious on this sector. We certainly wouldn't just be looking to buy the basket, if you will. It's actually consistent with what we're seeing in terms of market positioning. If you look at the semiconductor ETF, the SMH, it continues to have a more cautious tone," Gilbert said Thursday on "Trading Nation."

Taiwan Semiconductor is one name that boasts a strong long-term growth story, Gilbert said, and Marvell is another solid pick that could see upside from here.

The SMH was down more than 2 percent Friday, trading around $95.50 per share.

Poll: Are you bullish or bearish on the semiconductor space?


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more