The ETF iShares Semiconductor (NASDAQ:SOXX) has had a rough year. While semiconductor stocks in general posted historic gains through the first half of 2024, they erased much of their gains in late summer and fall. An industry analyst is optimistic about the industry’s prospects in 2025.
The semiconductor analyst
Vivek Aryaan analyst at Bank of America, highlighted six top semiconductor picks for 2025:
- NVIDIA Corp (NASDAQ:NVDA) with a price target of $190.
- Broadcom Inc (NASDAQ:AVGO) with a price target of $250.
- Marvell Technology Inc (NASDAQ:MRVL) with a price target of $140.
- Lam Research Corp (NASDAQ:LRCX) with a price target of $92.
- ON Semiconductor Corp (NASDAQ:ON) with a $90 price target.
- Cadence Design Systems Inc (NASDAQ:CDNS) with a price target of $365.
The analyst also downgraded the stock Microchip Technology Inc (NASDAQ:MCHP).
The AI boom
Arya cited Nvidia, Broadcom and Marvell as leaders in the AI space. According to the analyst, Lam Research’s capital expenditures will recover in 2025 thanks to reduced China headwinds. The analyst also believes that ON Semiconductor will recover from cyclical trends while Cadence Design will benefit from its resilience.
The analyst believes the semiconductor industry’s growth cycle will last until 2025. He noted that past bull cycles have lasted, on average, about 10 quarters, while the current rally has only lasted five quarters.
Arya sees two major trends impacting the industry in 2025.
“In the first half, we expect AI investments driven by model training and scaling to continue, doubling Nvidia’s Blackwell AI deployment ramps driven by cloud customers,” the analyst said. “At the same time, we expect non-AI end-market trends to remain weak throughout the first half.”
Arya expects the CHIPS law, enacted under President Joe Bidenremain in force after the inauguration of the president-elect Donald Trump. It expects all remaining funding to be disbursed in 2025.
The analyst believes that the automotive and industrial industries will fuel demand for semiconductors in the second half of the year.
“In the second half, we expect a recovery in auto/industrial semiconductors due to normalization of customer/channel inventories (replenishment + easy comps) and resumption of global automotive production,” Arya said.
The analyst predicted a reacceleration of electric vehicle sales of 29% compared to the previous year.
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