Broadcom (AVGO) and AMD (AMD) are still among Bank of America’s (BAC) top semiconductor picks because the firm believes that AI spending will stay strong for longer than many investors expect. Five-star analyst Vivek Arya now thinks that the AI data center systems market could reach $1.7 trillion by 2030, due to continued spending from major cloud companies like Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META). In addition, Bank of America raised its forecast for the AI accelerator market to about $1.2 trillion, up from its earlier estimate of $1 trillion.
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New trading tool for AMZN bullsThat is important for AMD because it is trying to win more share in AI accelerators, while also benefiting from Bank of America’s higher forecast for data center CPUs, which was raised to about $110 billion from $80 billion. At the same time, the growth in custom AI chips is important for Broadcom because big cloud companies are increasingly using their own specialized chips, such as Google’s TPUs and Amazon’s Trainium chips, instead of relying only on traditional GPUs.
Meanwhile, Bank of America also raised its AI networking forecast to about $316 billion from roughly $240 billion, which is especially relevant for Broadcom because networking is a major part of the AI infrastructure buildout. Moreover, the firm said that the market is becoming more diverse. This means that CPUs, custom chips, low-latency memory systems, and GPU-based systems can all grow together instead of one replacing the other. As a result, Bank of America raised its AMD price target to $500 from $450, while Broadcom’s target was not changed at $450.
Which Chip Stock Is the Better Buy
Turning to Wall Street, out of the two chip stocks mentioned above, analysts think that AVGO stock has more room to run than AMD. In fact, AVGO’s price target of $468.79 per share implies 12.3% upside versus AMD’s fair value.
