Bernstein analysts remain bullish on the semiconductor industry, projecting a return to growth in 2024 driven by memory recovery, improved PC and smartphone markets, and excitement surrounding Artificial Intelligence (AI).
"Our top picks remain AVGO and NVDA," says the Bernstein note. While acknowledging cyclical weakness in Broadcom (NASDAQ:AVGO)'s core business, Bernstein highlights a "robust AI story" and the potential upside from the VMware acquisition. Analysts believe NVIDIA (NASDAQ:NVDA) "remains the best way to play AI."
Qualcomm (NASDAQ:QCOM) also receives a positive nod, with Bernstein noting the increasing focus on its AI capabilities within the recovering smartphone market. The report finds QCOM's "product portfolio is as good as it has ever been" and sees the stock as attractively valued.
Bernstein expresses a more cautious view on analog chipmakers like Analog Devices (ADI), Texas Instruments (TXN), and NXP Semiconductors (NXPI) due to concerns about already priced-in recoveries and expensive valuations.
Analysts retain their Market Perform ratings on Advanced Micro Devices and Intel, noting AMD's AI potential but expressing limited upside for current investor expectations.