BofA Says Chip Stocks Won't Peak Until Mid-2026: Wall Street Picks These 9 Stocks
Ever since AI frenzy first took over markets, the semiconductor-tracking SOX index has shot past benchmark indices, and is already up 35% year-to-date. According to Bank of America, the semiconductor bull run is a long way away from petering out, with artificial intelligence momentum likely to carry it towards a mid-2026 peak.
Of course, a pullback could come from near-term triggers, such as the US election or monetary policy, but there's good reason to remain bullish. The chip industry often undergoes 10 quarters of upside after experiencing a downcycle, a pattern that has just begun, the BofA analysts wrote.
"The current upcycle started in late 2023, so we are only in quarter 3, implying strength likely till mid-2026. However, chip stocks (SOX) change direction 6-9 months ahead of cycle inflection, so semis could potentially peak sometime around the second half of 2025, or a year later," Bank of America said.
What's more, the sector is expected to accelerate towards double digit annual sales growth in 2025, after last year's inventory correction.
For investors trying to capture this rally, Wall Street believes that the following nine chip stocks warrant close attention.
For the first, $NVIDIA(NVDA.US$ is a top pick, as well as $Broadcom(AVGO.US$. Wall Street sees major upside potential for both, holding a $200 and $2,150 price target on each.
At least for Nvidia, some of this stems from bullish outlooks on AI data center expansions, which provide strong demand for the firm's hardware. Of today's global IT spending, data center systems make up around 5%, or $260 billion. But by 2028, this could jump to $360 billion.
Meanwhile, $Micron Technology(MU.US$ and $Qualcomm(QCOM.US$ have also performed well, with their shares climbing 54% and 43% respectively so far this year. Analysts are especially enthusiastic about Micron, the Idaho-based chipmaker is on the cusp of "one of the biggest cycles in history" for memory chips because of the AI craze, the analysts said.
$Applied Materials(AMAT.US$ has seen a year-to-date increase of over 50%. It announced a portfolio of products and solutions designed to address the patterning requirements of chips in the “angstrom era.” AMAT introduced innovative etch systems, CVD patterning films, and metrology solutions to enhance chips using EUV and high-NA EUV lithography.
Finally, the growing complexity of semiconductor manufacturing should support the industry's climbing valuations, justifying the trading range of these stocks, such as $KLA Corp(KLAC.US$, $Synopsys(SNPS.US$, and $Cadence Design Systems(CDNS.US$.
As the demand for advanced chip designs continues to rise, two top-rated semiconductor stocks, Synopsys and Cadence Design Systems, are poised to benefit from this trend. These Electronic Design Automation (EDA) giants together control about 60% of the global EDA market, positioning them to capitalize on the industry's growth - which is projected to reach $27 billion by 2034.
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Source: Yahoo Finance, MarketWatch
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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