Applied Materials, Nvidia, others to benefit as BofA sees 'soft landing' for chips
sankai

Applied Materials (NASDAQ:AMAT), Nvidia (NASDAQ:NVDA) and ON Semiconductors (NASDAQ:ON) are some of the semiconductor companies poised to benefit from Bank of America's top themes in the sector following a strong rally year-to-date.
Analyst Vivek Arya noted that there is likely to be a "soft-landing" for semiconductors, with the sector poised to benefit from themes such as reshoring, generative artificial intelligence and cloud computing and automation in the long-run. 
"We assume a soft-landing (non-memory semi sales down [less than 5% year-over-year], also confirmed by recent Taiwan Semiconductor (TSM) results/outlook) as consumer chip inventory correction is completed by [the first-half] and as industrial/auto chip pricing remains resilient," Arya wrote in a note to clients.
Arya noted that Applied Materials (AMAT) and KLA Corp. (KLAC) are poised to benefit from reshoring due in part to localization and duplication of global supply chains, leading to new fab construction and tooling.
Nvidia (NVDA) is likely to benefit from generative AI and the cloud as generative AI is creating novel text, image and video content, requiring heavy compute power. Nvidia's (NVDA) AI pipeline, including Hopper accelerators, Grace CPU, Bluefield DPU and optimized software should help boost its prowess in the space and if there is any recovery in gaming, Nvidia (NVDA) should outperform.
Arya also mentioned Broadcom (AVGO), Marvell Technology (MRVL), AMD (NASDAQ:AMD) and Credo Technology (CRDO) as other beneficiaries from AI and cloud computing.
ON Semiconductor (ON), along with Analog Devices (ADI), NXP Semiconductors (NXPI) and Coherent (COHR) are poised to benefit from growth in automation and electronic vehicles.
Goldman Sachs recently picked Nvidia (NVDA) as one of its top 50 return on equity stocks for 2023.