In a new note, five-star Bank of America (BAC) analyst Vivek Arya raised the firm’s semiconductor revenue estimate to $1.3 trillion for 2026, which is a $300 billion increase from just four months ago. This surge is largely being driven by AI and data center demand, with chip companies like Nvidia (NVDA) and Broadcom (AVGO) leading the way. Because of this momentum, the firm now expects the chip market to reach $2 trillion by 2030, which implies a 20% annual growth rate, and is more than double the industry’s average over the past decade.
Claim 30% Off TipRanks
New trading tool for LRCX bullsThat said, the growth is not happening evenly across the sector. Instead, most of the gains are concentrated in AI-related areas such as compute, networking, and memory, while other parts of the market are falling behind. For example, Bank of America sees strong opportunities in companies like Marvell (MRVL) and Advanced Micro Devices (AMD), as well as equipment makers like Applied Materials (AMAT) and Lam Research (LRCX). On top of that, chip design software firms like Cadence (CDNS) and Synopsys (SNPS) are expected to benefit as chip complexity increases.
However, consumer-focused segments like smartphones and PCs remain weak, which continues to weigh on companies such as Qualcomm (QCOM) and Skyworks (SWKS). In addition, there are some challenges behind these aggressive projections. In order for chip companies to meet their future targets, global cloud spending may need to exceed $1 trillion, which is higher than current estimates. While that level of investment could happen, it would depend on continued heavy spending from major players like Microsoft (MSFT) and Google (GOOGL).
Which Chip Stock Is the Better Buy?
Turning to Wall Street, out of the chip stocks mentioned above, analysts think that NVDA stock has the most room to run. In fact, NVDA’s price target of $273.57 per share implies 50.4% upside potential.
