TECHNOLOGY
STREET NOTES
Nvidia Is Named a Top Semi Stock at BofA. Here’s What It Likes About the Stock.
By Angela PalumboFollow
June 1, 2022 11:20 am ET
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Shares of Nvidia have fallen nearly 37% this year.
Justin Sullivan/Getty Images
Chip maker Nvidia NVDA +0.79% could benefit from growth in a number of areas, according to one analyst at BofA Global Research, which said the stock was its top large-cap sector pick.
Vivek Arya wrote in a research note that Nvidia (ticker: NVDA), as well as fellow semiconductor businesses Marvell Technology MRVL +2.59% (MRVL) and Advanced Micro Devices AMD +0.08% (AMD), can all greatly benefit from the continued growth in cloud computing, among other factors.
Arya also chose On Semiconductor (ON) as his top small- to mid-cap pick, saying the company would benefit from its automotive technology.
Arya wrote that in the past semiconductor companies had fewer drivers than they do now, such as computers and smartphones. Now “there are multiple end-markets served by a consolidated set of chip vendors, delivering proprietary products and generating solid FCF [free cash flow] margins.”
“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.
“Semis look compelling on a relative basis vs. industrial/Infotech stocks in the SPX [S&P 500] and catalysts such as easing of China lockdowns could help re-energize investor interest back in the sector,” Arya wrote.
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