Nvidia and Broadcom are highlighted by Bank of America as top chip stocks for 2025

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 the significant increase in artificial intelligence as the main driver for both companies, particularly in the first half of the year. Supported by strong investments from US cloud providers, Nvidia’s upcoming Blackwell chips are expected to maintain momentum in the AI ​​semiconductor industry; Broadcom is positioned to benefit from its diverse engagement in AI infrastructure.

Arya predicted a 15% increase in global semiconductor sales by 2025, bringing the total to $725 billion. Although this represents a slowdown from the 20% increase recorded in 2024, it still shows notable expansion. Artificial intelligence-driven demand is expected to dominate at the start of the year; As inventories normalize in the second half of the year and global automotive production increases, demand from automotive and industrial applications is likely to be at the forefront.

With products fundamental to the increasing use of artificial intelligence in data centers, Nvidia is unique because of its leadership in AI-related technologies. Broadcom, with its broad portfolio of artificial intelligence infrastructure, is also positioned to benefit from this expansion trend. Arya noted that the current semiconductor industry is in the midst of a recovery that will begin at the end of 2023 and may continue for another year and a half. Still, there are difficulties, including geopolitics in China, questions about global economic recovery and possible changes in attitudes toward artificial intelligence.

Despite these obstacles, Bank of America expects demand for artificial intelligence to continue to be a key driver, particularly for companies like Nvidia and Broadcom, whose technologies are fundamental to the industry’s ongoing transformation. Under the new US administration, Arya also noted that there will likely be more merger and acquisition activity in the sector, leading to a change in the competitive environment.

This article first appeared on GuruFocus.