Bank of America: AI sector preferred NVIDIA, Broadcom Micron and other emerging competitors are expected to welcome explosive growth

Recently, Bank of America Securities analyst Vivek Arya published a research note on the artificial intelligence space, stating that his top picks in the space are NVIDIA and Broadcom, given that accelerated/artificial intelligence server adoption is a generational shift, and that NVIDIA and Broadcom are leaders in it. Currently, the analyst has a "buy" rating on NVIDIA with a price target of $1,100 and a "buy" rating on Broadcom with a price target of $1,680.

However, the analyst also noted that the upward trend in the gas pedal market - which is set to reach $200 billion over the next three years - could present volatile but fruitful opportunities for second-ranked vendors, including Maverick Technology (No. 2 in AI networking and a rising star in custom chips), Micron Technology (likely to rapidly expand its high-bandwidth memory or HBM market share, but lagging behind its South Korean peers) and AMD (No. 2 in GPUs and No. 3 AI gas pedal supplier).

Interestingly, each of the sub-par AI players here trades at a higher valuation than the leaders in their respective segments, so expect more volatility in these stocks, the analyst added. However, as the leaders expand their potential market size, the subpar players may continue to carve out lucrative niches. The analyst currently has a "buy" rating and $95 price target on Meadville Tech and a "buy" rating and $195 price target on AMD. $Advanced Micro Devices (AMD.US)$ $NVIDIA (NVDA.US)$ $Micron Technology (MU.US)$ $Bank of America (BAC.US)$ $Broadcom (AVGO.US)$