Investing.com — Deutsche Bank analysts presented their semiconductor outlook for 2025, highlighting a mix of opportunities in artificial intelligence (AI) and large-scale semiconductors.
The bank said in a research note that it expects 16% year-over-year growth in the legacy memory semiconductor sector, up from 8% in 2024, as AI continues to dominate but a broader recovery emerging in other sub-sectors.
“On the AI front, we expect GPU-based accelerators to generate another year of outsized growth (led by NVDA and somewhat AMD (NASDAQ:)), with ASICs and players also contributing networks (AVGO, NXPI, ALAB, etc.),” the bank said.
They believe that “large-scale investment growth” and technological advancements will support AI-related demand.
In the broader field of semiconductors, German Bank (ETR:) expects gradual improvement as the industry rebounds from cyclical lows in 2024. Among these names, NXP Semiconductors (NASDAQ:) and ABOUT Semiconductor (NASDAQ:) stand out for their structural improvements, conservative growth expectations and attractive valuations.
Deutsche Bank analysts emphasize that investors should focus on companies positioned at the lower end of the growth spectrum but with strong upside potential.
Despite the recent underperformance of the Philadelphia Semiconductor (SOX) Index (-6% in 2024), Deutsche Bank sees this as a “reasonable bar” for 2025, with cautious optimism driven by improving fundamentals.
However, they point to challenges such as continued sluggish macroeconomic conditions, geopolitical uncertainties and high valuations.
For investors, the firm recommends maintaining selectivity, with a preference for stocks like NXPI and ON in the general area and AVGO and MRVL in the AI space. These companies are seen as well-positioned to benefit from accelerating growth and changing industry dynamics.
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