Chip Stocks At 'Premium Valuations': Why Bank Of America Is Bullish On Semiconductors In 2024
Portfolio Pulse from Neil Dennis
Despite a recent drop in semiconductor stocks, Bank of America maintains a bullish stance on the sector for 2024, citing a 65% gain in 2023. The Philadelphia Semiconductor Index (SOX) and the iShares Semiconductor ETF (SOXX) are highlighted, with SOXX falling 5.4% over two sessions. BofA analyst Vivek Arya acknowledges risks such as premium valuations, market rotation, and volatility but points to positive factors like a new upcycle, the potential of Generative AI, and the U.S. CHIPS Act. BofA sees Nvidia (NVDA), Broadcom (AVGO), AMD, and Marvell (MRVL) well-positioned to benefit from GenAI, while Intel (INTC), Texas Instruments (TXN), and Micron (MU) could gain from the U.S. CHIPS Act.
January 03, 2024 | 7:12 pm
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POSITIVE IMPACT
Advanced Micro Devices is positioned to benefit from Generative AI, according to BofA's analysis.
AMD's potential growth is supported by its position in the Generative AI market, which is in line with BofA's positive sector outlook.
CONFIDENCE 70
IMPORTANCE 75
RELEVANCE 70
POSITIVE IMPACT
Broadcom is among the companies BofA believes will benefit from the growth in Generative AI.
Broadcom's involvement in Generative AI is expected to contribute to its growth, aligning with BofA's bullish view on the sector.
CONFIDENCE 70
IMPORTANCE 75
RELEVANCE 70
POSITIVE IMPACT
Intel is among the companies expected to benefit from the U.S. CHIPS Act, with BofA highlighting its exposure to increased output from China.
Intel's exposure to China and potential benefits from the CHIPS Act are likely to provide a positive impact on its stock, as per BofA's analysis.
CONFIDENCE 75
IMPORTANCE 85
RELEVANCE 80
POSITIVE IMPACT
Marvell Technology is expected to benefit from the emerging Generative AI market, as highlighted by BofA.
Marvell's growth prospects are bolstered by its potential role in the Generative AI market, aligning with BofA's bullish semiconductor outlook.
CONFIDENCE 70
IMPORTANCE 75
RELEVANCE 70
POSITIVE IMPACT
Micron Technology is also expected to benefit from the U.S. CHIPS Act, with BofA believing it will be among the stocks most exposed to increasing output from China.
Micron's potential gains from the CHIPS Act and its exposure to China's manufacturing output are likely to positively influence its stock price.
CONFIDENCE 75
IMPORTANCE 85
RELEVANCE 80
POSITIVE IMPACT
Nvidia is expected to benefit from the monetization of Generative AI and the U.S. CHIPS Act, according to BofA.
Nvidia's positioning in the Generative AI space and potential funding from the CHIPS Act are seen as key drivers for growth, which could boost investor confidence.
CONFIDENCE 70
IMPORTANCE 85
RELEVANCE 80
POSITIVE IMPACT
SOXX fell 5.4% recently but had a 65% gain in 2023. BofA remains bullish on the semiconductor sector, which could indicate a rebound for SOXX.
SOXX's recent drop is seen as a short-term fluctuation within a bullish long-term trend supported by BofA's positive outlook on the semiconductor industry.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
Texas Instruments is expected to benefit from the U.S. CHIPS Act, according to BofA, due to its exposure to increasing output from China.
Texas Instruments' positioning for increased output from China and potential CHIPS Act benefits are seen as positive for its stock price.
CONFIDENCE 75
IMPORTANCE 85
RELEVANCE 80