A senior semiconductor analyst at Bank of America Securities is bullish on several artificial intelligence (AI) companies despite the market correction.
In a new interview on CNBC Television, Vivek Arya say that chip companies still have many more advantages.
Arya thinks Nvidia (NVDA), which closed Tuesday at $208, could soon rise to $350, an increase of more than 68%.
He also predicts Credo (CRDO) to rise more than 7% from Tuesday’s close of $234.
Arya’s other top chip trades include Analog Devices (ADI) with a price target of $460, up over 13% from the current value of $404 at the time of writing, and Texas Instruments (TXN) with a price target of $370, up over 28% from the current value of $288.
Arya believes that demand for AI infrastructure is not slowing down, positioning chip companies for future rallies.
“Right now we’re seeing the use of this [AI] infrastructure is exceptionally high. In fact, companies like OpenAI and Anthropic are trying to buy computing power wherever they can find it. There is hardly a single GPU (graphics processing unit) that is not 100% utilized. There is no dark GPU. There is no dark computing.”
The analyst also says that demand for AI chips will continue in the coming years.
“The main thing the industry does is plan for several years. There’s already a roadmap for the next two or three years, and you have these pools of excellence, whether it’s the specific types of memory chips, whether it’s the specific types of wafers. For example, there’s only one Taiwanese semiconductor that helps supply advanced wafers to the entire accelerator industry. If you have that one person who controls a large part of this production, it’s very difficult to fill the order to double and what we’re seeing is a combination of very strong demand and very disciplined supply coming into the market… therefore the cycle is a lot more sustainable.”
Finally, the analyst says several semiconductor companies are undervalued at current stock prices.
“The three largest companies I follow – Nvidia, Broadcom, Micron – are all trading below market value right now. This isn’t a case of valuations being completely out of control. The growth rates could still justify a lot more upside potential for these semiconductor stocks.”
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