The Semiconductor Analyst: Bank of America analyst Vivek Arya named six of his top semiconductor picks for 2025:

The analyst also downgraded Microchip Technology Inc (NASDAQ:MCHP).

The AI Boom: Arya cited Nvidia, Broadcom and Marvell as the leaders in AI. He says Lam Research’s capital expenditures will recover in 2025 along with the reduction of China headwinds. The analyst also thinks ON Semiconductor will recover from cyclical trends while Cadence Design will benefit from its resiliency.

The analyst sees the semiconductor industry’s upcycle lasting into 2025. He noted that past bullish cycles have lasted, on average, roughly 10 quarters, while current bullishness has only lasted five quarters.

Arya sees two major trends affecting the industry in 2025.

“In the first half, we expect the AI investments driven by AI training and scaling of models to continue, doubling down on the Nvidia Blackwell deployment ramps driven by cloud customers,” the analyst said. “At the same time, we expect trends for non-AI end markets to remain weak throughout 1H.”

Arya expects the CHIPS Act, enacted under President Joe Biden, to remain in place following the inauguration of President-elect Donald Trump. He expects all remaining funding to be dispensed in 2025.

The analyst sees the automotive and industrial industries as fueling semiconductor demand in the year’s second half.

“In the second half, we expect a pickup in auto/industrial semis as customer/channel inventories normalize (replenishment + easy comps), as well as a pickup in global auto production,” Arya said.

The analyst projected electric vehicle sales to reaccelerate 29% year-over-year.

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