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.
"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.
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