Analyst Sees 'Broadening Rally' In Semiconductors In 2025: 2 Top Stock Picks, 2 To Avoid
Semiconductor analyst Vivek Arya expects a "surprising broadening rally in semis” in 2025 compared to last year.
What Happened: This year will mark a widening divide between “AI haves and cyclical have-nots,” Arya says.
There are still several unresolved concerns for the semiconductor sector, he adds, citing global tariffs, rising inflation and China restrictions.
"We expect 1H25 to be dominated by AI stocks, with easier comps and presumed macro improvement leading to 2H cyclical rotation," Arya said.
The Stock Picks: Arya highlights Nvidia Corporation (NASDAQ:NVDA) as a top pick due to Blackwell’s launch, a compelling valuation, new products and growth highlighted at CES 2025.
Arya has a price target of $190 on Nvidia. The stock's forward price-to-earnings ratio is justified due to "stronger growth opportunities ahead,” he says.
"Data center demand potentially faces strong, long-term demand dynamics," Arya added.
Arya also picked Marvell Technology (NASDAQ:MRVL), which has a $140 price target. The company's 40% to 50%+ compounded annual earnings per share growth potential helps justify this price, he says.
A meeting with Marvell management at CES provided "solid visibility" for custom chip ramps for partners Amazon and Microsoft, the analyst added.
"We maintain our strong preference for MRVL."
Stocks to Avoid: Arya reiterated a Neutral rating on Advanced Micro Devices (NASDAQ:AMD). He also reiterated an Underperform rating on Intel Corporation (NASDAQ:INTC).
The analyst said AMD's hardware could be more than one year behind Nvidia with software also "well behind" Nvidia.
Arya has a $155 price target on AMD. AI growth could be offset by slowdowns in cyclical embedded and console markets, he says.
The analyst has a $21 price target on Intel, citing manufacturing uncertainties with risks of a new foundry strategy.
"INTC's manufacturing issues are well-known, but less appreciated is the multi-year drag on profitability from returns owed to co-investment partners Apollo and Brookfield."
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