Bank of America on Friday named several top picks among semiconductor companies, including Nvidia (NVDA) - Get NVIDIA Corporation Report, Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report, Marvell Technology (MRVL) - Get Marvell Technology Group Ltd. Report and Broadcom (AVGO) - Get Broadcom Inc. Report.
BofA also chose ON Semiconductor (ON) - Get ON Semiconductor Corporation Report as an auto-related chip selection, KLA (KLAC) - Get KLA Corporation (KLAC) Report as a capital-expenditure chip selection and Nova (NVMI) - Get Nova Measuring Instruments Ltd Report as a small-cap selection.
The bank raised its price target on Nvidia to $275 from $260. That’s based on a 2023 price-earnings multiple, excluding cash, of 47 versus the previous estimate of 44.
“That’s toward the high end of NVDA's historical 20 times-to-54-times PE range, reflecting Nvidia's superior long-term growth profile in large, underpenetrated markets,” Bank of America said.
As for AMD, “Our $135 price objective is based on 35 times our 2023 estimated non-GAAP EPS, which is in line with AMD's historical median multiple and with EPS growth visibility,” the bank said.
When it comes to Marvell, “Our $75 price objective is based on a 32 times fiscal year 2024 estimated/calendar year 2023 estimated earnings per preferred share,” the investment firm said.
That’s “in line with growth peers and well-supported by the 30%-plus longer-term compounded annual EPS growth potential, driven by potential success in 5G over the next few years.
“This multiple is also in line with other small- and mid-cap semiconductor growth peers at early stages of new product cycles.”
Among the stocks, Nvidia recently traded at $220.56, down 0.8%; AMD at $104.37, off 1.7%; and Marvell at $62.30, down 1.5%. Broadcom was off 0.9% at $502.67.
Over the past six months, Nvidia moved up 66%, AMD 26% and Marvell 30%. Broadcom tacked on 5%.