Nvidia, AMD Among Top Semis In 2018, According To Bank Of America

The ride for semiconductor investors could get bumpier in 2018, but one Wall Street analyst says investors who stay along for the ride will enjoy the destination.

The Analyst

Bank of America analyst Vivek Arya named his top semiconductor stocks on Wednesday:

• Buy-rated NVIDIA Corporation NVDA, price objective of $251.
• Buy-rated Texas Instruments Incorporated TXN, price objective of $115.
• Buy-rated Advanced Micro Devices, Inc. AMD, price objective of $18.
• Buy-rated ON Semiconductor Corp ON, price objective of $25.
• Buy-rated Cypress Semiconductor Corporation CY, price objective of $21.
• Buy-rated Marvell Technology Group Ltd. MRVL, price objective of $28.

The Thesis

According to Arya, semiconductors can expect plenty of market volatility in 2018 as year-over-year comparisons get even more difficult, but a number of secular and cyclical tailwinds will continue to push the group higher.

“Semis are the building blocks of the global economy and the Moore’s Law edict of faster/smarter/smaller/cheaper continues to drive new markets,” Arya said.

Artificial intelligence, virtual/augmented reality, 5G mobile networks, cloud computing and autonomous vehicles will continue to be long-term drivers of chip demand, he said.

Q1 has historically been a seasonally strong period for semiconductor stocks as well. Arya said he's most bullish on cloud processor vendors and diversified auto, industrial and Internet of Things chipmakers. He is most cautious on smartphone suppliers.

Price Action

Here’s how Bank of America’s top semi stocks were trading on Wednesday:

• Marvell was up 2.2 percent.
• Cypress up 1.9 percent.
• ON up 3 percent.
• AMD up 8.1 percent.
• Microchip Technology up 1.0 percent.
• Texas Instruments up 2.2 percent.
• Nvidia up 5.5 percent.

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