Depending on where you look, the valuations of some of the more crowded semiconductor stocks may be getting a bit too hot to handle amid this stage in the AI boom. Undoubtedly, the AI revolution is changing the work world, and soon, the world’s most powerful large language models (LLMs) may find a home in our devices in addition to the cloud.

Perhaps in-device semiconductors may be worth more love for investors, even as the mega-cap tech titan continues investing heavily in their AI-powered cloud capabilities. As the semiconductor landscape evolves, there is sure to be a new class of winners (and laggards).

In any case, don’t feel the need to pay a price you’re uncomfortable with if you can’t stomach the thought of losing money in the face of a potential near-term pullback. Indeed, some of the hottest semi stocks could face the most severe downside. In this piece, we’ll put our value caps on as we hunt for undervaluation in an otherwise overheated corner of the tech sector.

Qualcomm (QCOM)

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Qualcomm (NASDAQ:QCOM) stock has been going parabolic lately, up more than 84% in the past year. Undoubtedly, many analysts and investors are realizing the full extent of semiconductor firms’ capabilities as we move deeper into the age of generative AI.

Even after a hot melt-up, shares go for a very modest 25.8 times trailing price-to-earnings (P/E), making it a value play compared to the GPU makers bid up furiously amid the AI boom. Though the GPU heavyweights could prove their worth, I can’t say I’m in a hurry to pay a multiple north of 70 times P/E for NVDA stock, at least not ahead of its quarterly results, which are right around the corner.

With a slate of impressive new chips coming and a recent partnership with Ampere Computing for an AI server push effort, I believe QCOM stock is the perfect mix of value, growth and momentum at this market crossroads.

Applied Materials (AMAT)

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Applied Materials (NASDAQ:AMAT) is another way to play the cheaper side of the semiconductor waters. Though shares of the semiconductor manufacturing equipment maker are going for an incredibly fair 25.18 times trailing P/E, AMAT stock is also finding itself hovering close to all-time highs, even after slipping more than 1% in the after-hours session on the back of a good second-quarter result that also saw upbeat guidance.

As one of the standout AI enablers incorporating AI (think it’s data-driven AI inspection machines) into its products, investors seem to be getting a double shot of AI with the name. As AMAT stock retreats following a respectable Q2 beat and raise, perhaps value-conscious AI investors will have their shot to punch their ticket into the name.

It will be interesting to see how the stock settles in the following sessions. If investors are inclined to take profits after having a chance to understand the earnings better, perhaps an opportunity to buy at under $210 per share will open up.

Taiwan Semiconductor (TSM)

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Taiwan Semiconductor (NYSE:TSM) is another semiconductor value stock that I think many are still sleeping on. The nearly $ 800 billion foundry giant, which makes chips for some tech heavyweights, most notably Apple (NASDAQ:AAPL), has surged over 67% in the past year. Despite the momentum and new highs, the stock looks discounted 29.39 times, trailing P/E.

Taiwan Semiconductor is firing on all cylinders, with “strong demand for our 3nm and 5nm technologies” expected to support growth in the second quarter, according to CFO Wendell Huang.

With the potential for AI phones (think iPhone 16, which is expected to have its most AI-capable Neural Engine yet) to start a sales boom, I think it’s a mistake to count TSM out of the game. Indeed, the company’s latest sales boom may not be the peak yet, especially now that AI will be on everyone’s mind when they upgrade their devices over the next 18 months.

On the date of publication, Joey Frenette held shares of Apple. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.