Editor's note: This article has been corrected. Amgen said its pending acquisition of Horizon Therapeutics would be able to move forward after it settled with the FTC and agreed not to bundle its drugs.
Stocks pulled back in September, primarily due to the Federal Reserve forecast that rates would stay higher for longer. Unsurprisingly, the Nasdaq Composite took the news worse than the other two major indexes, as shown in the chart below.
And since the Nasdaq tends to offer higher growth than the S&P 500 and the Dow Jones Industrial Average, it's more exposed to higher interest rates, which hit growth stocks harder.
There's also evidence that the hype around artificial intelligence (AI) stocks seems to be wearing off, as only Nvidia seems to be fully capitalizing on the boom nearly a year after ChatGPT was first launched. However, not every Nasdaq stock was a loser last month. Let's take a look at the three top performers on the Nasdaq to see whether any are worth buying. We'll use the Nasdaq 100 to narrow the list down to better-known stocks.
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1. GlobalFoundries (up 5.3%)
GlobalFoundries (GFS 1.25%) is one of the rare semiconductor foundries based in the U.S. And even while the broader tech sector fell, GlobalFoundries gained as demand for semiconductor manufacturing is expected to grow with the AI boom.
Last month, the stock got a lift from news that it would be in attendance at a meeting with President Biden in Vietnam to boost that country's presence in the semiconductor industry. It also opened a new $4 billion foundry in Singapore, covering 247,570 square feet, its latest move to expand.
Later in the month, it was awarded a 10-year contract for $3.1 billion with the Department of Defense, and the company applied for funding from the U.S. CHIPS and Science Act. GlobalFoundries also said it plans to "massively expand" a factory in Dresden, investing $8 billion in the expansion.
Those moves all signal that the company sees more growth ahead. With the stock trading at a reasonable valuation and set to return to growth after a downturn in the chip sector, now looks like a good time to buy.
2. Amgen (up 4.9%)
There wasn't any major market-moving news out on Amgen (AMGN 0.22%) last month. However, the biotech stock seemed well positioned to fend off the broad-market sell-off as the healthcare sector is less exposed to market volatility than most others.
At the beginning of the month, Amgen also said its pending $28 billion acquisition of Horizon Therapeutics would be able to move forward after it settled with the Federal Trade Commission (FTC) and agreed not to bundle its drugs.
Later in the month, a Wall Street Journal report said the company could capture some of the bounty from the weight-loss drug market that has brought a windfall to Novo Nordisk through breakthrough drugs like Ozempic and Wegovy.
Amgen has a number of weight-loss drugs in the pipeline, and the stock trades at a modest forward price-to-earnings ratio of 13. If any of those upcoming drugs prove to be breakthroughs, the stock will likely be a winner over the next year or two.
3. Airbnb (up 4.3%)
Finally, Airbnb (ABNB 0.75%) was the third-best performer on the Nasdaq 100 last month.
The home-sharing leader got off to a strong start after the S&P announced that the stock would be added to the S&P 500 at the beginning of the month. That move not only gives the stock credibility but also increases demand for the stock since it means exchange-traded funds (ETFs) that track the S&P 500 must buy it.
The only other major news on the stock was that short-term rental restrictions went into effect in New York City, leading to a 75% decline in listings in a major market. While that's clearly a negative for the company, on a global scale unlikely to be material to its results.
At one point, the stock was up by double digits during the month but gave up some of those gains following the Federal Reserve's forecast that interest rates would stay higher for longer. While Airbnb now collects significant interest income thanks to higher rates, investors believe the higher rates will cool off growth in the travel market by pressuring consumer spending.
Airbnb shares fell sharply on Oct. 3 on similar concerns about rate hikes and because of an analyst downgrade. The stock still has a lot of growth potential, and the valuation looks reasonable. It looks like a good buy at the current price and would be more appealing if it continues to pull back on interest rate concerns.
