Bank of America analysts predict continued momentum for semiconductor stocks in 2025, driven initially by strong demand for artificial intelligence (AI) chips, followed by a broader rally in auto and industrial chipmakers in the second half of the year.
In a recent note, analysts led by Vivek Arya outlined a two-phase outlook for the semiconductor sector in 2025. The first half of the year will see AI chip stocks sustain their surge, particularly as Nvidia prepares to roll out its highly anticipated Blackwell GPU. This next-generation chip is expected to outpace the current Hopper model, with powerful capabilities designed to meet the growing demand for AI model training and execution.
“AI semiconductor stocks are likely to maintain strong momentum, with major US cloud customers like Google and Meta driving demand for the Blackwell GPU,” Arya’s team noted. However, they cautioned that potential shipment delays for the chips remain a risk, adding uncertainty to the delivery timeline.
Looking ahead, the second half of 2025 may see a shift in investor focus as AI stocks potentially peak amid concerns over the return on significant investments in the sector. “We expect investor interest in AI stocks to wane as growth expectations face tougher year-over-year comparisons starting in 2026, following two years of explosive 100%+ annual growth,” the analysts explained.
As AI stocks plateau, attention could shift to auto and industrial chipmakers. Analysts expect a recovery in global economic conditions to boost inventory replenishment and drive a resurgence in auto production. “The second half of 2025 will likely see a pickup in auto and industrial semiconductor stocks as inventories normalize and global auto production gains momentum,” they said.
Overall, Bank of America projects semiconductor sales to rise 15% to $725 billion in 2025, reflecting a slight slowdown from the anticipated 20% growth in 2024. This would signal a broadening of the semiconductor rally, which has seen AI-driven companies like Nvidia and Taiwan Semiconductor surge more than 30% this year.
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