A Bank of America Securities senior semiconductors analyst is bullish on multiple artificial intelligence (AI) chip companies despite the market’s correction.
In a new interview on CNBC Television, Vivek Arya says that chip companies still have a lot more upside.
Arya believes Nvidia (NVDA), which closed at $208 on Tuesday, may soon soar to $350, a more than 68% increase.
He also predicts Credo (CRDO) will increase more than 7% from its Tuesday close of $234.
Arya’s other top chips trades includes Analog Devices (ADI) with a price target of $460, a more than 13% increase from its $404 value at time of writing, and Texas Instruments (TXN) with a price target of $370, a more than 28% increase from its current value of $288.
Arya believes that the demand for AI-infrastructure is not slowing down, setting chip companies up for future rallies.
“Right now, what we are seeing is that the usage of this [AI] infrastructure is exceptionally high. In fact, the likes of OpenAI and Anthropic, they are trying to buy computing capacity wherever they can find it. There is hardly a single GPU (graphics processing unit) out there that is not 100% utilized. There is no dark GPU. There is no dark compute.”
The analyst also says that AI chips demand will persist over multiple years.
“The important thing the industry is doing is planning for multiple years out. There is already a road map that goes out for the next two or three years, and you have these pools of excellence, whether it is in the specific kinds of memory chips, whether it’s in the specific kind of wafers. For example, there is only one Taiwan semiconductor that is helping provide leading-edge wafers to the entire accelerator industry. When you have that one person who is controlling a lot of this production, it is very hard to double order and create that overbuild. what we are seeing is a combination of very strong demand and very disciplined supply coming to the market … that’s why the cycle is a lot more durable.”
Lastly, the analyst says that several semiconductor companies are undervalued at their current stock prices.
“The three largest companies that I cover – Nvidia, Broadcom, Micron – they are all trading below market multiple right now. This isn’t a case where valuation has gone completely out of control. The growth rates are still able to justify much more upside to these semiconductor stocks.”
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