Semiconductor stocks have been a winning theme in the artificial intelligence (AI) stock rally. Emerging chip companies NVIDIA (NASDAQ: NVDA) And Broadcom (NASDAQ:AVGO) The performance was so good that management conducted a stock split to make it easier for investors and company employees to buy or sell shares.

Remember that stock splits lower the stock price but compensate for this by increasing the number of shares. In other words, stock splits do not fundamentally change the valuation of a stock. A sell-off like the one investors recently saw in Nasdaqmay.

Although the market has recovered, these two (AI) winners are still off their highs. If the Nasdaq continues to sell off, both stocks would be great buying opportunities for long-term investors. Here’s why.

A sell-off creates a much-needed margin of safety for Nvidia stock

No company has had more success in AI than Nvidia, whose graphics processing units (GPUs) have become the choice for data centers running complex AI models. Its proprietary CUDA software helps customers harness the full power of their GPU chips, making them perfect for AI.

The technology industry’s leading players are engaged in an arms race for the computing resources needed to support AI growth, and this strong demand has pushed Nvidia’s revenue to new heights starting in 2023.

The heavyweights in the AI ​​and cloud space intend to continue spending money. Microsoft said in its last earnings call that demand for AI is outpacing available computing resources. Meta-platforms CEO Mark Zuckerberg recently said in a fireside chat with Nvidia CEO Jensen Huang that his company has amassed nearly 600,000 of Nvidia’s H100 chips and will invest more in supporting AI next year.

The CEO of Nvidia competitor Advanced micro devices believes the broader AI chip market will grow to $400 billion over the next few years. Nvidia, the market leader, sells only a fraction of that today. Signs point to continued demand, and the company wants to protect its market share by regularly releasing cutting-edge chips to keep pace with innovation.

Although sales will continue to not grow by three digits, analysts expect Nvidia to increase its profits by 36 percent annually in the long term.

Assuming Nvidia meets expectations, the stock looks like a bargain today at a price-to-earnings (P/E) ratio of 44, which is attractive for such a fast-growing company. However, the company will face competition from other chipmakers and large technology customers that may try to build their own chips.

While the stock might look cheap in hindsight if everything goes well, investors should welcome any sell-off that creates a margin of safety for the unknowns.

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A shaky market makes Broadcom a buying opportunity on dips

Broadcom is an excellent stock for AI investors looking for diversification. The company specializes in semiconductors for networking and communications and has another business unit that provides infrastructure software for enterprises. Total revenue is split roughly 2:1 between semiconductor solutions and infrastructure software.

Semiconductor stocks are cyclical. AI has sparked a boom in chip spending, but that will likely eventually fade as AI capacity catches up with demand. Broadcom isn’t growing as fast as Nvidia, but its software business generates recurring revenue that could make the company less volatile over the long term.

However, Broadcom is getting a big boost from AI. Just as AI models require powerful processor chips, they also generate heavy network loads that require similarly AI-specialized hardware. The company initially expected AI to account for 25% of its semiconductor solutions revenue in 2024, but increased that share to 35% in the second quarter.

Meanwhile, the addition of VMware to its software business helped Broadcom’s total revenues rise 43% year over year in the second quarter. Organic revenue growth (excluding the acquisition) was still 12%. That’s not exactly explosive, but analysts expect the company to grow its profits 18% annually over the long term, and that’s nothing to sneeze at.

Broadcom is also a great dividend stock, which sets it apart from most AI investments. The initial yield isn’t huge, just 1.3%, but management has increased its payout by an average of 19% per year over the past five years.

The stock offers investors a little of everything: AI upside, dividends, and a diversified business that could hold up better in a sell-off. Shares trade today at a P/E of 33, which isn’t shockingly expensive, but it’s not cheap either. Investors can confidently buy and hold Broadcom if the Nasdaq sells off and the stock goes down with it.

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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Justin Pope does not own any of the stocks mentioned. The Motley Fool owns and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

2 Recent Artificial Intelligence (AI) Stock Splits to Buy During the Nasdaq Sell-Off were originally published by The Motley Fool.