Why Bank Of America Says You Should Stay Bullish On Semi Stocks

Semiconductor stocks have been red hot as of late, with the iShares S&P NA Tec. Semi. Idx. Fd.(ETF) SOXX up 25.5 percent year to date. However, there could be plenty of upside remaining throughout the year in a handful of select names, according to Bank of America analyst Vivek Arya (check out Vivek Arya's track record).

Key themes from the Bank of America Global Tech Conference suggest strong demand in the key growth fields of autos, industry, gaming, mobile and data centers along with only mixed sentiment among investors. But investors certainly have the opportunity to be selective heading into the second half of 2017, Arya wrote Friday.

“Heading into 2H, we prefer stocks exposed to seasonal strength in consumer product cycles,” Arya said.

Related Link: Why Nvidia's Strategy Hints At A 'Fast-Rising' Stock Price

3 Segments

Bank of America specifically likes three segments that should be seasonally strong throughout the remainder of the year. First, Broadcom Ltd AVGO, Skyworks Solutions Inc SWKS and Texas Instruments Incorporated TXN should benefit from the upcoming iPhone 8 cycle.

Second, NVIDIA Corporation NVDA, Intel Corporation INTC and Advanced Micro Devices, Inc. AMD should benefit from strength in the gaming/data center market.

Finally, Microchip Technology Inc. MCHP, Texas Instruments and Cypress Semiconductor Corporation CY should continue to be winners from the rise of Internet-of-Things connectivity.

Beyond Those 3

Outside of those three target areas for investors, Arya mentioned Cavium Inc CAVM, ON Semiconductor Corp ON and Inphi Corporation IPHI as three potential beneficiaries of the favorable pricing environment in 2017.

Of all the names mentioned above, Arya named Broadcom as his top stock pick in the space due to the company’s numerous upcoming positive catalysts.