Dear Reader,
Happy Thursday.
I’m excited because today is our holiday party. Woo!
We have Victoria and Sam in from Ohio, Andy in from Baltimore. It’s very exciting.
Anyway, today I’d like to talk about Bank of America.
They’ve come out with their chip analysis and their top AI chip stocks for 2026.
Their managing director, Vivek Arya says he believes semiconductor sales will grow another 30% in 2026.
That would make it the highest sales level in semiconductor history.
He goes on further to state that it is still the trade to make in 2026.
I have come out and said I don’t think it’s the best trade for 2026.
I’ve talked about an America First trade.
We know, and he admits, too - we’re in a breather right now.
But he argues the AI trade is still in the early to middle stages.
He thinks returns will be choppy and sporadic but that Wall Street underappreciates the critical mission of these stocks.
He calls what we’re going through right now, and I thought this was funny - “middle aged blues” in AI investments.
I wouldn’t know anything about middle-aged blues here, okay? 😂
Arya is forecasting another solid 50% year over year growth in AI chips driven “by strong data center utilization, tight supply, enterprise adoption, and race between LLM builders, ChatGPT, Anthropic, etc., hyperscale and sovereign customers.”
On the same note, he shared his top six AI stocks, which I’ll share with you here:
Nvidia (SYM: NVDA) - big, bold claim there. He says Nvidia, which is currently selling around $177, is worth $250.
Broadcom (SYM: AVGO) - currently trades around $341 a share - he says it’s worth $535.
Lam Research (SYM: LRCX) is currently priced around $163 per share. He says it’s worth $195.
KLA Corporation (SYM: KLAC) is currently priced at $1,170 per share and BofA’s latest price target is $1,450.
Analog Devices (SYM: ADI) trades around $270 and Arya gave a price target at $290.
Cadence Design Systems (SYM: CDNS) trades around $311 and was given a $350 price target.
Now, of course we have to be objective when it comes to our money.
We can’t engage in magical thinking.
Just because I’ve talked about the AI trade being on a breather right now, doesn’t mean other people don’t have other opinions.
As a steward of my own money, I have to be able to reconsider my opinions, and even throw my opinions away.
I have to be very independent when I look at allocating my money.
I can’t let bias or magical thinking infiltrate anything I do if I want to retire with more money than with less.
We have to be ruthlessly honest, ruthlessly objective in our thinking.
That’s why I figured I would bring this little counterargument to you today…
A brief note before my team and I go celebrate the holidays together at one of these top golf type places.
Have a wonderful day, and I’ll see you tomorrow.
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