Investor favorites Nvidia and Advanced Micro Devices have taken a beating this year amid a broader tech sell-off and now look ripe for investors to buy the dip. But fund manager Jordan Cvetanovski is putting his money into other chip stocks — including one he says is “the world’s best business.” The iShares Semiconductor ETF, or SOXX , which tracks the performance of semiconductors, is down nearly 30% this year, putting it firmly in bear territory, as consumers rotate out of riskier growth stocks amid fears of an aggressive rate-hike cycle by the Fed. With hot favorites Nvidia and AMD down about 40% this year, many analysts are now urging investors to buy the dip on these quality chip stocks . But Cvetanovski is choosing to stay on the sidelines for now. Speaking to CNBC Pro Talks , Cvetanovski, who is chief investment officer and portfolio manager of Pella Funds Management, said he thinks Nvidia is a “wonderful business” and there is “no question” that his fund will eventually own shares of the tech titan. “But right now, they are still expensive from a free cash flow growth perspective,” Cvetanovski said. Instead, he lavished praise on Dutch chip maker ASML , a company which he thinks is at the core of the semiconductor sector. “ASML is, in my opinion, one of the best companies in the world, if not the best… Because without ASML, in my humble opinion, no tech company really exists,” Cvetanovski said. He highlighted ASML’s importance to the sector. “Moore’s Law basically doesn’t exist without them,” he added. Moore’s Law predicted that the density of transistors able to fit on a chip would double approximately every two years . It has long been held as an important benchmark for the rapid development of the semiconductor sector. Chipmakers want to use the narrowest wavelength of light possible in lithography so that they can fit more transistors onto each piece of silicon. A monopoly in its own right ASML is key to this process. It is the only firm in the world capable of making extreme ultraviolet (EUV) machines — highly complex machines that are needed to manufacture the most advanced chips. These machines shine exceptionally narrow beams of light onto silicon wafers, allowing more transistors to be fitted onto a chip. “We think for the world’s best business on three plus percent free cash flow yield with an order book of almost two years and what’s happening in the in the market in particular, you’re seeing not only the natural growth in chip demand, but also every region wanting to have their own in-house chip manufacturing on their sovereign land,” Cvetanovski said. Read more Chip supply issues are still giving some of world’s biggest companies a major headache Intel CEO now expects chip shortage to last into 2024 Citi downgrades NXP Semiconductors, says company’s margins are near their peak “Demand for [their EUV machines] is bound to continue for many years to come. “Innovation can’t come from anywhere but them… No one else can do what they do,” he added. Shares in ASML are down more than 30% this year. Cvetanovski acknowledged that they could still fall further but he is standing firm on the stock. “It will go down with the market if semis continue to sell off, but we think we will just buy more if the price is right,” he said.