Bank of America Analyst Sees Further Downside for Semiconductor Sector
Bank of America analyst Vivek Arya warned that chip stocks could face further declines despite strong earnings from companies like Nvidia. The Philadelphia Semiconductor Index (SOX) is seen with roughly 10% more downside risk, which would bring it back to its valuation discount against the S&P 500 before ChatGPT's launch in late 2022. Arya cited several factors contributing to near-term pressure on semiconductor stocks: rising interest rates, public resistance to data center projects across states like New York and Pennsylvania, geopolitical tensions, concerns over circular financing among AI firms, and heavy investor positioning. He also noted that while Nvidia's recent earnings beat was positive, the broader structural issues around its cash usage remain a concern. The analyst suggested potential buying opportunities in eight chip stocks if the pullback materializes: Nvidia (NVDA), Marvell Technology Group, Micron Technology, Lam Research, AMD, Intel, Analog Devices, and ON Semiconductor.
Topics: Bank of America Nvidia semiconductors SOX index stock market