| | | Nvidia, Broadcom, Marvell among BofA's top chip stocks for 2025
Dec. 16, 2024 7:59 AM ET
By: Chris Ciaccia, SA News Editor
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As the calendar approaches 2025, Bank of America has issued a call for next year's top semiconductor stocks, with the list including some of the usual heavyweights.
Nvidia (NASDAQ: NVDA), Broadcom (NASDAQ: AVGO) and Marvell Technology (NASDAQ: MRVL) are on the list, as are Lam Research ( LRCX), On Semiconductor ( ON) and Cadence Design Systems ( CDNS).
"We see 2025 as a year of two different trends," analyst Vivek Arya wrote in a note to clients. "In the first half, AI investments and NVDA Blackwell deployments driven by US cloud customers sustain momentum in AI semis. However, in the [second-half], interest could shift to less-crowded auto/industrial chipmakers on inventory replenishment and pick-up in auto production, assuming a global economic recovery."
Overall, sales are forecast to grow 15% to $725B in 2025, a "strong pace," albeit a decline from the 20% growth seen this year, Arya added.
Nvidia, Broadcom and Marvell should benefit from their artificial intelligence exposure, while Lam Research should benefit from the spending recovery in flash memory and China, Arya added. On is poised to benefit from the "eventual" recovery in the automotive and electric vehicle space (likely in the second-half of the year), while Cadence is the leader in the electronic design automation space.
"Semi up-cycles tend to last for ~2.5 years (follow by 1 yr downcycle), and we are only midway in the upcycle that started in [the fourth-quarter of 2023]," he posited. "We expect memory sales to outgrow again in 2025, up 20% (vs. 79% YoY in 2024), and core semis (ex-memory) up 13%, led by strength in data center but modest declines in other consumer, auto, industrial segments."
Known unknownsDespite the optimism, there are a lot of unknowns going into 2025, with the biggest being AI-related sentiment, China, a broader macro recovery and what happens with Intel ( INTC), Arya said.
The rotation from semiconductor stocks (which have declined roughly 8% in the second-half of the year) to AI-beneficiary software stocks should continue in 2025, Arya added.
"On the positive side, we could see renewed M&A activity (semis/semis, semis/software) under the new US administration," Arya wrote.
Nonetheless, AI should continue to be strong, at least until the second-half of the year, Arya said. Aside from the aforementioned companies, Arm Holding ( ARM), Micron ( MU), Coherent ( COHR), Credo Technology ( CRDO) and Macom ( MTSI) should also benefit from AI, Arya said. |
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