Investing.com – Bank of America laid out its semiconductor outlook for 2025 on Monday, highlighting six chip stocks it recommends for investors in the coming year.

The bank forecasts a 15% increase in semiconductor industry revenue to $725 billion in 2025. While this growth is robust, it is expected to be slower compared to the 20% growth seen this year.

BofA expects memory sales to rise 20% in 2025 after rising 79% year-over-year in 2024, with core semiconductors, excluding memory, expected to grow 13%.

“We see 2025 as a year with two different trends. “In the first half of the year, AI investments and NVDA Blackwell implementations driven by US cloud customers maintained momentum in the AI ​​segment,” analysts led by Vivek Arya said in a note.

“However, in H2 (second half), interest may shift to less crowded auto/industrial chipmakers to replenish their inventories and boost auto production, assuming there is a recovery in the global economy.”

BofA’s top picks include AI leaders such as NVIDIA (NASDAQ:), Broadcom (NASDAQ:), and Marvell Technology Inc (NASDAQ:).

“We continue to have confidence in AI, at least until 2H25,” analysts said.

Additionally, the company identified Lam Research (NASDAQ:) as a leading flash storage tools provider poised for capital expenditure recovery and impact recovery in China.

Market leader in automobiles and electric vehicles (EV). ON Semiconductor (NASDAQ:) is highlighted for its potential cyclical recovery in the second half of 2025, and Cadence Design Systems Inc (NASDAQ:) is known for its robust double-digit growth, especially as the AI ​​hardware cycle slows in the second half of the year Year.

The report also includes rating changes for smaller mid-cap stocks. Advanced energy Industries (NASDAQ:) was upgraded to Buy from Neutral, and Ambarella (NASDAQ:) was upgraded to Neutral from Underperform due to expected growth acceleration.

On the other hand, Microchip Technology (NASDAQ:) was downgraded to “Underperform” from “Neutral” with analysts citing a “lack of catalysts.”

Additionally, BofA recognizes the potential of small to mid-cap stocks such as: Coherent (NYSE:), MACOM Technology Solutions (NASDAQ:) and Ceragon Networks (NASDAQ:), especially as growth extends beyond just the computing industry to the networking and optics industries.

“Despite the crowded inventory of AI stocks, we still see an ongoing “arms race” between cloud service providers, TAM expansion into enterprise and government deployments, and a continued pace of innovation in training and inference (agentic AI),” analysts continued .

“However, AI stocks could potentially peak in the second half of 2025 if investors worry about tougher year-on-year comparisons in 2026 after two years of over 100% annual growth in AI silicon.”