Nvidia and Broadcom Highlighted as Top Chip Stocks for 2025 by Bank of America

AI adoption will dominate early 2025, with potential shifts toward automotive and industrial chip markets later in the year. Read More...

Nvidia (NVDA, Financials) and Broadcom (AVGO, Financials) are among the top semiconductor stocks for 2025, Bank of America said in a new analysis.

Analyst Vivek Arya noted, especially in the first half of the year, significant increase in artificial intelligence as a main driver for both firms. Supported by strong investment from U.S. cloud providers, Nvidia’s forthcoming Blackwell chips should maintain momentum in the AI semiconductor industry; Broadcom is positioned to gain from its varied exposure to AI infrastructure.

Arya projected a 15% rise in world semiconductor sales by 2025, therefore bringing the whole figure to $725 billion. Although this marks a slowing down from the 20% increase shown in 2024, it still shows a notable expansion. Early in the year, demand driven by artificial intelligence is expected to be dominant; latter half when inventory levels normalize and global car production improves, demand driven by automotive and industrial applications should take front stage.

With its products fundamental to the growing usage of artificial intelligence in data centers, Nvidia’s leadership in AI-related technologies keeps it unique. Broadcom is similarly positioned to profit from this expansion trend with its wide portfolio of artificial intelligence infrastructure. Arya pointed out that the present semiconductor industry is in the midst of an upcycle starting in late 2023 and maybe lasting another eighteen months. Still, there are difficulties including geopolitics in China, questions about worldwide economic recovery, and possible changes in artificial intelligence attitude.

Notwithstanding these obstacles, Bank of America expects artificial intelligence demand to remain a major driver, especially for firms like Nvidia and Broadcom whose technologies are fundamental for the ongoing transformation of the industry. Under the incoming U.S. government, Arya also hinted at the likelihood of more merger and acquisition activity in the sector, therefore altering the competitive environment.

This article first appeared on GuruFocus.