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TSMC's revenues rose 41.2%, while Semtech targets 75% data-center sales CAGR through fiscal 2030.
NVIDIA's (NVDA - Free Report) latest corporate governance controversy has introduced a massive risk into an already volatile artificial intelligence (AI) investment landscape. On Nov. 8, NVIDIA's board announced an independent investigation following reports that CEO Jensen Huang had been targeted by a foreign intelligence operation. Meanwhile, the chipmaker and its chief executive are facing a proposed shareholder class-action lawsuit (Reuters).
The immediate market reaction was significant for this stock, which gained nearly 400% in three years till the end of October 2026. Nov. 9, 2026, NVIDIA shares plunged 4.27% to close at $178.67, wiping approximately $190 billion off its market capitalization, according to Reuters. The decline came despite broader technology-market strength.
For investors, the concern right now is whether capital concentrated in a single AI leader should be redirected toward businesses and sectors offering more diversified earnings drivers, stronger cash-flow visibility and relatively lower exposure to geopolitical uncertainties.
Image Source: Zacks Investment Research
What Should Investors Do Now?
Investors should adopt a cautious approach rather than aggressively buying the dip or exiting technology stocks altogether. The ongoing AI correction reflects growing concerns about elevated capital expenditure, uncertain returns on AI investments, stretched valuations and tighter financing conditions, apart from the latest controversy. According to State Street Investment Management's Nov. 6 assessment, global semiconductor stocks were already in a 20% drawdown before the midterm elections, indicating that the correction extends beyond NVIDIA's company-specific concerns.
Amid this, investors should prioritize companies with strong balance sheets, sustainable free cash flow, reasonable valuations and visible earnings growth. Reducing concentrated exposure, retaining some liquidity and gradually diversifying into defensive sectors would be prudent until earnings visibility and AI spending returns improve. Here, we have listed three prime areas for fresh allocation.
3 Areas Where Investors Should Redirect Their Money
Healthcare - A Defensive Sector With Growth Potential: Healthcare offers a combination of defensive earnings and innovation-driven growth. State Street Investment Management maintained a positive view on healthcare for fourth-quarter 2026, citing improvements in biopharmaceutical innovation, life sciences tools and managed care.
Investors can consider the Health Care Select Sector SPDR Fund (XLV) or established companies such as Halozyme Therapeutics (HALO - Free Report) and Glaukos (GKOS), both with a Zacks Rank #1 (Strong Buy) and Growth Score of A. Healthcare exposure can diversify portfolios away from semiconductor spending cycles while retaining long-term growth opportunities.
Consumer Staples Offer Stability Amid Technology Volatility: Consumer staples deserve attention as investors seek businesses with relatively predictable demand and established cash flows. The Financial Times reported on Nov. 10 that global consumer staples stocks gained 10.6% in October, their strongest monthly performance since 1998. Healthcare stocks also advanced 9.8% during the month, reflecting the broader defensive rotation.
Investors can consider the Consumer Staples Select Sector SPDR Fund (XLP), alongside Coty (COTY - Free Report) , a Zacks Rank #2 (Buy) stock with a Growth score of A. Consumer Staples businesses offer exposure to essential consumer products rather than discretionary AI infrastructure spending.
Selective Semiconductor Exposure to Maintain AI Participation: A complete withdrawal from semiconductors may be unnecessary right now. Instead, one can adopt a measured portfolio rotation strategy within the technology space. Taiwan Semiconductor Manufacturing (TSM - Free Report) and Semtech Corporation (SMTC - Free Report) provide alternative exposure to semiconductor manufacturing, custom AI accelerators and computing infrastructure.
TSMC remains a key beneficiary of demand for advanced chip manufacturing. Its third-quarter 2026 revenues increased 41.2% year over year to $46.72 billion, while net income surged 68.7%. For Semtech, the company recently outlined a long-term target of 75% compound annual growth in data-center net sales between fiscal 2026 and fiscal 2030. While TSM carries a Zacks Rank #2 and a Growth Score of B, Semtech sports a Zacks Rank 1 and has a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
View the Zacks #1 Rank List
Image: Shutterstock
NVIDIA Governance Woes: 3 Areas to Buy From Amid AI Market Slump
Key Takeaways
NVIDIA's (NVDA - Free Report) latest corporate governance controversy has introduced a massive risk into an already volatile artificial intelligence (AI) investment landscape. On Nov. 8, NVIDIA's board announced an independent investigation following reports that CEO Jensen Huang had been targeted by a foreign intelligence operation. Meanwhile, the chipmaker and its chief executive are facing a proposed shareholder class-action lawsuit (Reuters).
The immediate market reaction was significant for this stock, which gained nearly 400% in three years till the end of October 2026. Nov. 9, 2026, NVIDIA shares plunged 4.27% to close at $178.67, wiping approximately $190 billion off its market capitalization, according to Reuters. The decline came despite broader technology-market strength.
For investors, the concern right now is whether capital concentrated in a single AI leader should be redirected toward businesses and sectors offering more diversified earnings drivers, stronger cash-flow visibility and relatively lower exposure to geopolitical uncertainties.
Image Source: Zacks Investment Research
What Should Investors Do Now?
Investors should adopt a cautious approach rather than aggressively buying the dip or exiting technology stocks altogether. The ongoing AI correction reflects growing concerns about elevated capital expenditure, uncertain returns on AI investments, stretched valuations and tighter financing conditions, apart from the latest controversy. According to State Street Investment Management's Nov. 6 assessment, global semiconductor stocks were already in a 20% drawdown before the midterm elections, indicating that the correction extends beyond NVIDIA's company-specific concerns.
Amid this, investors should prioritize companies with strong balance sheets, sustainable free cash flow, reasonable valuations and visible earnings growth. Reducing concentrated exposure, retaining some liquidity and gradually diversifying into defensive sectors would be prudent until earnings visibility and AI spending returns improve. Here, we have listed three prime areas for fresh allocation.
3 Areas Where Investors Should Redirect Their Money
Healthcare - A Defensive Sector With Growth Potential: Healthcare offers a combination of defensive earnings and innovation-driven growth. State Street Investment Management maintained a positive view on healthcare for fourth-quarter 2026, citing improvements in biopharmaceutical innovation, life sciences tools and managed care.
Investors can consider the Health Care Select Sector SPDR Fund (XLV) or established companies such as Halozyme Therapeutics (HALO - Free Report) and Glaukos (GKOS), both with a Zacks Rank #1 (Strong Buy) and Growth Score of A. Healthcare exposure can diversify portfolios away from semiconductor spending cycles while retaining long-term growth opportunities.
Consumer Staples Offer Stability Amid Technology Volatility: Consumer staples deserve attention as investors seek businesses with relatively predictable demand and established cash flows. The Financial Times reported on Nov. 10 that global consumer staples stocks gained 10.6% in October, their strongest monthly performance since 1998. Healthcare stocks also advanced 9.8% during the month, reflecting the broader defensive rotation.
Investors can consider the Consumer Staples Select Sector SPDR Fund (XLP), alongside Coty (COTY - Free Report) , a Zacks Rank #2 (Buy) stock with a Growth score of A. Consumer Staples businesses offer exposure to essential consumer products rather than discretionary AI infrastructure spending.
Selective Semiconductor Exposure to Maintain AI Participation: A complete withdrawal from semiconductors may be unnecessary right now. Instead, one can adopt a measured portfolio rotation strategy within the technology space. Taiwan Semiconductor Manufacturing (TSM - Free Report) and Semtech Corporation (SMTC - Free Report) provide alternative exposure to semiconductor manufacturing, custom AI accelerators and computing infrastructure.
TSMC remains a key beneficiary of demand for advanced chip manufacturing. Its third-quarter 2026 revenues increased 41.2% year over year to $46.72 billion, while net income surged 68.7%. For Semtech, the company recently outlined a long-term target of 75% compound annual growth in data-center net sales between fiscal 2026 and fiscal 2030. While TSM carries a Zacks Rank #2 and a Growth Score of B, Semtech sports a Zacks Rank 1 and has a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.