Reviewed by Gotrade Internal Analyst
Jakarta, Gotrade News - Talk of an artificial intelligence (AI) bubble bursting doesn't seem to hold water right now, at least not according to major global financial institutions. Bank of America (BofA) actually sees 2026 as the midpoint of this tech evolution, not the end of the trend.
BofA's latest research estimates the AI market is only halfway through an 8 to 10-year evolution cycle. This is fueled by data center infrastructure spending projected to hit US$1.2 trillion by 2030.
Key Takeaways
- BofA says 2026 marks just the halfway point of the long-term AI evolution.
- Capital expenditure (capex) for AI infrastructure is predicted to remain massive and "mission critical."
- Six chip stocks are seen as strategically positioned, including equipment and design players.
According to BofA, the biggest opportunities right now lie with large-cap companies leading their respective sectors. They highlighted six main names, with NVIDIA Corporation remaining the undisputed industry king with a valuation that still makes sense given its growth.
Opportunities Beyond Nvidia
Aside from Nvidia, BofA analysts are shining a spotlight on Broadcom Inc. due to its top-tier profitability among semiconductor producers. The bank even predicts Broadcom’s stock price could hit the US$500 level next year, thanks to its impressive free cash flow.
Chip manufacturing support equipment is also a major focus in this investment thesis. Lam Research Corporation and KLA Corporation are considered strategically vital because chip factories are heavily dependent on their production machines.
BofA notes that KLA boasts one of the most stable profit margins in the industry, justifying its premium valuation. Meanwhile, Lam Research remains a key player despite short-term risks related to tariffs and inflation.
Diversifying into Design and Industrial
For the Electronic Design Automation (EDA) segment, BofA is betting on Cadence Design Systems, Inc. as a top pick. However, investors still need to keep an eye on trade tension risks with China that could impact this segment.
On the other hand, Analog Devices, Inc. made the list thanks to strong cash flow despite facing macro economic challenges. A slowdown in the automotive and industrial sectors could pose a risk to demand for their high-performance chips.
BofA emphasizes that the market often underestimates the offensive and defensive nature of AI infrastructure investments for big tech companies. This building momentum is predicted to continue well into the second half of this decade.
Reference:
- Business Insider, These are the top 6 chipmaker stocks for 2026, according to BofA. Accessed on December 30, 2025
- Featured Image: Shutterstock
Disclaimer
Gotrade is the trading name of Gotrade Securities Inc., registered with and supervised by the Labuan Financial Services Authority (LFSA). This content is for educational purposes only and does not constitute financial advice. Always do your own research (DYOR) before investing.
