Chip stocks hammered last week now rebounding — dip buy on Lam Research
Thesis
Chip stocks were hammered during last week's global tech sell-off, pushing prices down to attractive levels. However, the fundamental backdrop remains incredibly strong: major banks like Citi and BofA just raised their price targets on Lam Research, anticipating a multi-year spending boom that could reach $250 billion. South Korea's announcement of an $880 billion investment into chips and data centers further confirms this demand. With tech futures now rebounding as geopolitical tensions ease, this creates a classic dip-buying opportunity in a sector with massive long-term institutional backing.
Strategy approach
Build a mean-reversion strategy on LRCX using the D1 timeframe. Enter long when the stock has dropped >5% over the prior 5 sessions but closes higher than the previous day (engulfing or reversal candle). Exit when price tags the 20-day upper band or after a 14-day holding period. Add a 6% hard stop loss.