Applied Materials, Nvidia, others to benefit as BofA sees ‘soft landing’ for chips
sankai Applied Materials (NASDAQ: AMAT ), Nvidia (NASDAQ: NVDA ) and ON Semiconductors (NASDAQ: ON ) are some of the semiconductor companies poised to benefit from Bank of America’s top themes in the sector following a strong rally year-to-date. Analyst Vivek Arya noted that there is likely to be a “soft-landing” for semiconductors, with the sector poised to benefit from themes such as reshoring, generative artificial intelligence and cloud computing and automation in the long-run. “We assume a soft-landing (non-memory semi sales down [less than 5% year-over-year], also confirmed by recent Taiwan Semiconductor ( TSM ) results/outlook) as consumer chip inventory correction is completed by [the first-half] and as industrial/auto chip pricing remains resilient,” Arya wrote in a note to clients. Arya noted that Applied Materials ( AMAT ) and KLA Corp. ( KLAC ) are poised to benefit from reshoring due in part to localization and duplication of global supply chains, leading to new fab construction and tooling. Nvidia ( NVDA ) is likely to benefit from generative AI and the cloud as generative AI is creating novel text, image and video content, requiring heavy compute power. Nvidia’s ( NVDA ) AI pipeline, including Hopper accelerators, Grace CPU, Bluefield DPU and optimized software should help boost its prowess in the space and if there is any recovery in gaming, Nvidia ( NVDA ) should outperform. Arya also mentioned Broadcom ( AVGO ), Marvell Technology ( MRVL ), AMD (NASDAQ: AMD ) and Credo Technology ( CRDO ) as other beneficiaries from AI and cloud computing. ON Semiconductor ( ON ), along with Analog Devices ( ADI ), NXP Semiconductors ( NXPI ) and Coherent ( COHR ) are poised to benefit from growth in automation and electronic vehicles. Goldman Sachs recently picked Nvidia ( NVDA ) as one of its top 50 return on equity stocks for 2023 .
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