Nvidia, On Semiconductor picked as top semiconductor stocks at BofA
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Nvidia (NASDAQ:NVDA) and On Semiconductor (NASDAQ:ON) are the top semiconductor stocks at investment firm Bank of America, as the firm notes the companies are likely to benefit from the continued growth in cloud computing and the electrification of the auto.
Analyst Vivek Arya noted that Nvidia (NVDA), along with Advanced Micro Devices (AMD) and Marvell Technology (MRVL) are likely to be the biggest benefits from the push to the cloud, while On Semi (ON), Analog Devices (ADI) and NXP Semiconductors (NXPI) are poised to benefit the most from their auto exposure.
"Our top picks serve end-markets where we expect spending/content growth drivers to be most resilient, such as in cloud computing/AI, high-end industrial, EV/advanced driver assist systems and in rising chip complexity," Arya wrote in a note to clients.
Nvidia (NVDA) and On Semi (ON) shares both fell slightly less than 0.5% in premarket trading on Wednesday.
In addition to the aforementioned list, KLA Corp. (KLAC), GlobalFoundries (GFS), Applied Materials (AMAT), Lam Research (LRCX) and Teradyne (TER) are the companies most likely to benefit from a rise in semiconductor spending. 
In addition, Arya noted that the top picks are likely to generate 23% and 13% year-over-year sales growth, along with 25% and 18% earnings growth, 25% free cash flow margins but they still trade at roughly 20 and 17 times earnings.
"While PE in isolation doesnât signal a 'bottom' we do note: semis look compelling on a relative basis vs. industrial/Infotech stocks in the [S&P 500]; and catalysts such as easing of China lockdowns could help re-energize investor interest back in the sector," the analyst added. 
Last month, ARK Invest purchased 250,000 shares of Nvidia (NVDA) after having previously liquidated the asset manager's stake in the graphics chip giant in November 2021.