BofA Recommends 6 Chipmaker Stocks for 2026 Amid AI’s $1T Spending Surge
Recent research from Bank of America (BofA) suggests that chipmakers stand to gain significantly from the burgeoning AI market. The firm’s analysts predict that while the AI sector will encounter some fluctuations, it is positioned for solid growth. They anticipate that ongoing expansions in data centers and increased manufacturing expenditures will drive this momentum.
BofA’s Outlook on the AI Market
Analysts at BofA have described the evolution of the AI market as being approximately halfway through a timeline expected to last eight to ten years. They believe that 2026 will serve as a pivotal year within this framework. As businesses continue to enhance their IT infrastructure, tech companies are expected to ramp up the intensity of AI workloads.
Top Chipmaker Stocks for 2026
BofA has identified six chip stocks that are particularly well-positioned to benefit from capital expenditures in the AI sector. This spending is projected to reach $1.2 trillion by 2030. The selected stocks are:
- Nvidia: Up 41% year-to-date.
- Broadcom: Up 52% year-to-date.
- Lam Research: Up 146% year-to-date.
- KLA Corporation: Up 103% year-to-date.
- Analog Devices: Up 30% year-to-date.
- Cadence Design Systems: Up 6% year-to-date.
Analysis of Key Stocks
Among these, BofA views Nvidia as the clear leader in the industry, noting its growth potential despite having a valuation at half its growth rate. Similarly, Broadcom is rated highly, trading at 33 times its predicted earnings for 2026, with expectations to reach $500 per share due to its strong profitability.
Lam Research’s equipment plays a crucial role in chip fabrication, and despite potential impacts from tariffs and inflation, BofA sees it as a strategic investment in AI manufacturing. KLA stands out due to its impressive profit margins, reinforcing its status as a stable player in the market.
Cadence Design Systems leads in Electronic Design Automation, but analysts caution against the risks associated with trade tensions involving China. Analog Devices, although robust with high free cash flow, might face challenges if economic slowdowns lead to decreased spending from automotive and industrial clients.
BofA’s Overall Projections
Despite various challenges, BofA maintains an optimistic viewpoint on the chip sector heading into 2026. They assert that while discussions regarding the speed and profitability of AI investments will persist, the consensus may not fully appreciate the critical nature of capital expenditure investments made by tech giants.
In conclusion, the firm’s insights indicate a bullish stance on both large-cap chipmakers and select smaller companies, affirming their potential in the evolving AI landscape.
