Goldman Sachs is bullish on three semiconductor stocks, while warning of the risk of stock price overextension.

According to TechFlow Research, the SOX rose 88% in Q2. Goldman Sachs believes earnings beating expectations is a high-probability event, but pressure from stock prices pricing this in early also exists. Covered stocks are expected to beat expectations across the board this quarter, with AI server chips providing the strongest drive, while Industrials and Automotive still lag behind. The tactical list clearly indicates Overweight on AMAT (target price $645), AMD ($640), and ON ($95); it is cautious on KLAC (Neutral) and ARM (Underweight), and while Q is rated Buy, the risk-reward ratio is weak. Goldman Sachs' 2027 EPS forecast for AMD is 13% higher than market consensus. Memory shows the greatest upside, with SNDK's target price raised from $1,200 to $2,200, STX raised to $960, and WDC raised to $650 (up 240% year-to-date).