Semiconductor stocks are historically volatile but may still prove cheap compared to other tech names.

An article in the Wall Street Journal on February 7 notes strong fundamentals pushed the group higher than the broader S&P 500 as well as the tech sector.

The Turnaround Tuesday buying included massive gains for the likes of Micron (MU), which the Journal notes surged some 10% after increasing its outlook for the current quarter. That was the latest industry insight pointing to further growth. Other stocks such as Skyworks Solutions Inc. (SWKS), Qualcomm Inc. (QCOM), Broadcom Limited (AVGO) and Nvidia Corp (NVDA) also surged.

And while the Philadelphia Semiconductor Index did fall 2.25% Wednesday, giving back some of those gains, the Journal piece notes investors are still largely buying the growth story that memory chip prices have not peaked. (For more, see also: The Industry Handbook: Semiconductor Industry.)

The group has also put in some impressive gains that may have led to some investors cashing in some gains. The article points out that the key gauge for chip stocks, the Philadelphia Semiconductor Index known by its ticker as the SOX, has more than doubled in two years. Just two weeks ago the SOX had finally moved some 4.5% above its previous high all the way back at the height of the dot com bubble in March of 2000.

Strong Chip Demand

Where is this demand coming from? Well even as PC shipments slow further, the Journal points out there has been increasing need for chips in sectors such as auto and data centers. (For more, see also: 3 Chipmaker Stocks Nearing Breakouts.)

Healthy sales and profits are keeping valuations more reasonable than some other sectors, according to the Journal’s analysis, with the SOX trading a below 15 times forward earnings—a 44% discount to the Nasdaq as of Tuesday’s close. And the article notes the average P/E of constituents in the index has grown just 14% over the past two years, compared to a 120% jump in the index’s value.