Nvidia, Broadcom Chosen As Top Semiconductor Picks For AI Leadership By Analyst

Datacenter remains one of few bright spots in first-quarter semiconductor earnings (i.e. Taiwan Semiconductor Manufacturing Co TSM EPS), with four major U.S. hyperscalers (Alphabet Inc GOOG GOOGL Google, Microsoft Corp MSFT, Meta Platforms Inc META, Amazon.Com Inc AMZN) set to report in the coming weeks.

Ahead of earnings, BofA Securities analyst Vivek Arya’s consensus tracker indicates that first-quarter global hyper-scale capex will be $93.8 billion, up 71% year-over-year. For calendar years 2025 and 2026, capex is projected at $402 billion and $429 billion, approximately 4% and 7% higher than the prior outlook.

Importantly, Arya highlighted increasing concerns that AI data center buildouts might peak in 2025 and then considerably slow down afterward.

Also Read: Analyst Sticks With Nvidia Despite Fallout From China Curbs

However, he highlighted that capex from non-CSPs, including emerging cloud vendors, enterprises, and national AI infrastructure projects, could be an additional source of sustaining AI investments, filling more than any demand gap.

Overall, Arya continues to view the demand for AI computing as healthy, and the ongoing shift toward compute-hungry test-time computing and reasoning models should further help.

The analyst’s top AI picks remain Nvidia Corp NVDA and Broadcom Inc AVGO, respective merchant and custom AI silicon leaders.

According to Arya, the reports about Microsoft canceling new data center leases and Amazon pausing certain discussions on leases are notable. The analyst explained that Microsoft's actions may be tied to OpenAI strengthening its connections with other cloud providers, while Amazon's moves could be linked to forthcoming AI Diffusion rules and may align with their broader onshoring strategies.

Meanwhile, Meta and Google recently reaffirmed their 2025 capex guides. Overall, Arya noted that AI demand is simply shifting between vendors rather than disappearing.

Price Actions: NVDA stock is up 3.4% at $102.25 at the last check on Wednesday. AVGO is up 3.8% at $176.15.

Read Next: