Despite heightened uncertainty right now, one thing is crystal clear: Stock market downturns don't last forever. The technology-centric Nasdaq-100 index has plunged beyond the 20% threshold that technically defines a bear market, at one point losing more than 31% from its all-time high. But as the month winds down, it has shaved a few percentage points off that loss as some early evidence emerges that inflation is slowing, and therefore, interest rates might not rise as high as initially expected.

Despite the potential that the turnaround has begun, patient long-term investors still have a chance to pick up high-quality stocks at a steep discount. And the semiconductor industry might be a great place to look. Advanced computer chips are in huge demand thanks to the growing digitization of consumer products, and producers could be playing for a slice of a $1 trillion annual pie within the next decade.

Here are two semiconductor stocks worth buying as the broader markets begin to recover.

A computer chip manufacturing worker soldering a semiconductor.

Image source: Getty Images.

1. MKS Instruments

MKS Instruments (MKSI 11.96%) doesn't produce computer chips itself, but rather it provides products and services to the world's largest manufacturers. In fact, the company says virtually every single semiconductor produced globally is made with MKS products. But with a history spanning 60 years, MKS also has a strong presence in other industries like defense, life sciences, and industrial tech.

On the semiconductor side, the company helps producers save on costs and boost output by reducing waste and improving processes. Its suite of tools is designed to deal with new-age challenges that chip manufacturers face as semiconductors continually shrink in size and become more mobile, yet need to be even more powerful. MKS covers every stage of the process from silicon wafer production to ion implantation to inspection equipment for the finished product, to ensure manufacturers are yielding the maximum level of output. 

Like most chip companies, MKS had a strong pandemic period. Supplies fell short thanks to lockdowns, yet surging demand persisted as consumer-product digitization continues to expand into new markets like electric vehicles. Despite Q1 2021 being incredibly strong, the company managed to grow its revenue a further 7% in its most recent first quarter of 2022, to $742 million, and it would've done even better if not for short-term supply chain disruptions. 

But profitability is where MKS really shines. It has generated $11.54 in trailing-12-month earnings per share, which places its stock at a price-to-earnings ratio of just 10.5. That's a 50% discount to the iShares Semiconductor ETF, which trades at a ratio of 21.4, and it implies MKS stock would have to double just to trade in line with its peers in the industry. 

It can be beneficial to own companies with strong earnings in a volatile market because they're less likely to require an injection of capital. And in the case of MKS, it also offers a quarterly dividend of $0.22 per share, which means you get paid to own it. 

A digital rendering of a computer chip being plugged into a circuit board.

Image source: Getty Images.

2. Advanced Micro Devices

When it comes to semiconductor behemoths, Advanced Micro Devices (AMD 3.25%) fits the description to a T. It's a household name thanks to its popular gaming chips for computers, and the company's hardware now also powers both of the world's leading console platforms -- Microsoft's Xbox and Sony's PlayStation 5. 

AMD's strength as a company stems from its diversity. The company also has an exciting deal with Tesla to provide chips for the infotainment systems in that company's suite of electric vehicles. They're more powerful than the typical systems in most combustion-engine powered cars; Tesla owners can play games, access apps, and even browse the internet, in addition to controlling most in-car functions.

AMD also has a strong presence in the data center segment, with a leadership position among the world's dominant providers of cloud services, like Amazon, Alphabet's Google, and Alibaba. This drove a whopping 88% revenue growth in AMD's enterprise, embedded, and semi-custom segment alone in the first quarter of 2022, to $2.5 billion. 

The company has an incredibly exciting growth opportunity ahead thanks to its acquisition of Xilinx, a global leader in adaptive computing. This advanced technology allows computer chips to adjust to the needs of the user in real time, which is a huge leap from typical hardware that needs to be swapped out to suit different applications. AMD thinks this is the next frontier in high-performance computing.

Over the last 12 months, AMD has generated $18.8 billion in revenue and $3.41 in earnings per share; it's a financial powerhouse. Its year-over-year revenue growth rate of 71% in the first quarter of 2022 marked a minor slowdown from the 93% it delivered in the year-ago period, but the underlying figures are much larger now, which will make the comparables tougher to beat going forward. This is a natural feature of any rapidly growing business. 

AMD's stock price has dipped 37% amid the broader tech sell-off, but given its financial performance, this might be a great opportunity for investors to consider opening a position.