The cyclical nature of the chip business makes both earnings and stock prices very volatile. The group has been in a downturn for several quarters now. But because the group's largest supplier and bellwether, Applied Materials AMAT , has not warned of disappointing numbers in its quarterly earnings report due out next week, investors are optimistic that the company will meet estimates, said Morningstar stock analyst Jeremy Lopez. If Applied Materials does well, the other companies should, too, he said. Though there's still downside risk in all of these stocks, it's also true that if investors dally, they may miss an upturn in the sector, Lopez said.
Investors just have to be committed for a long time.
The biggest gainer on the Nasdaq was online advertiser Digital Island ISLD . The problem with buying Digital Island shares because of this news alone, is that the announcement provided no financial details, said Morningstar stock analyst T.K. MacKay. It's all hype at this point. Today's move is the first step of the plan. Comdisco has racked up mounds of debt as expansions into other areas, such as telecom, have failed.