Bank of America (BAC) has flagged compute-focused chipmakers Nvidia (NVDA), Advanced Micro Devices (AMD), Broadcom (AVGO), and Credo Technology Group (CRDO) as attractive opportunities. BofA’s five-star–rated analyst Vivek Arya said their valuations remain “compelling” and well below historical levels, even as AI spending continues to accelerate.
Claim 50% Off TipRanks Premium
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis and maximize your portfolio's potential
BofA Is Bullish on Semiconductor Sector
In his latest note, Arya said the semiconductor space looks mixed, with some chip stocks appearing stretched, while four compute-related names still offer attractive value.
He added that his preferred compute picks—Nvidia, Broadcom, AMD, and Credo—are expected to deliver strong growth, with average revenue growth of 42% and adjusted earnings growth of 49% between 2025 and 2027. Despite that outlook, the stocks trade at around 24 times 2027 earnings, or just 0.5 times their PEG ratio, which Arya sees as attractive compared with other chip stocks.
Arya said this creates a “compelling valuation” setup, especially as large cloud providers continue to view investment in computing infrastructure as essential. He expects this to support double-digit revenue growth across the group.
BofA Sees Cloud Spending Surge
BofA pointed to strong cloud spending trends, noting its data suggests cloud capital spending could rise 38% year over year in 2026, with growth potentially moving toward 50% by year-end. Even with higher spending, the firm believes overall free cash flow across the sector should remain positive.
Looking ahead, he expects renewed investor interest in compute stocks as upcoming cloud AI earnings reports and Nvidia’s GTC conference in mid-March help reenergize the group.
Which Is the Best AI Chip Stock, According to Analysts?
Using TipRanks’ Stock Comparison Tool, we compared the above-mentioned chip stocks to see which one offers the highest upside potential based on Wall Street analyst forecasts.
Investors can dig deeper to decide which AI chip stock best fits their strategy. Below is a screenshot for reference.
