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Nvidia, AMD, Marvell, KLAC Among Top Chip Picks at Bank of America

Bank of America named several top semiconductor picks, including Nvidia, AMD, Marvell and KLA.
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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.

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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%.

Broadcom, Marvell and Nvidia are holdings in the portfolio of Jim Cramer's Action Alerts PLUS investing club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.