Bank of America: Chip sales will exceed trillion US dollars in 2026, these six stocks will be the first choice for investment

The Zhitong Finance App learned that Bank of America analyst Vivek Aya believes that the artificial intelligence boom has not cooled down, but continues to expand. Although sceptics about AI point out that its jaw-dropping valuation is a reason to avoid it, Aya said the industry is at the “midpoint” of a decade-long transformation, and Nvidia (NVDA.US) and Broadcom (AVGO.US) are leading this transformation.

In a report, Aya predicts that global semiconductor sales will achieve 30% year-on-year growth and ultimately push the industry to break the $1 trillion annual sales milestone in 2026.

Aya said he strongly believes in companies that have “moats quantified by profit margin structures.” In addition to Nvidia and Broadcom, he also highlighted four other major semiconductor companies — Lam Research, KLAC.US (KLAC.US), Adderall Semiconductor (ADI.US), and Kengteng Electronics (CDNS.US) — as their top choices in 2026.

“I always say investing in semiconductors is very simple,” Aya told reporters during a conference call on December 19. You don't need any sell-side analysts to do this. Just rank all of your companies by gross margin and buy in the top five, so you won't make too many mistakes.”

Bank of America estimates that by 2030, the total addressable market for AI data center systems will exceed $1.2 trillion, with a compound annual growth rate of 38%. AI accelerators alone represent a $900 billion market opportunity.

Despite the alarming numbers, the market remains cautious because AI data centers are expensive to build. According to Bank of America data, a typical 1 gigawatt facility requires more than $60 billion in capital expenditure, about half of which is directly spent on hardware.

This begs the question: Will the return on investment be realized in the end?

Aya remains optimistic, and he sees current spending as both “offensive and defensive.” In other words, big tech companies have no choice but to invest to protect their existing business landscape.

Aya said that as the company with the highest market capitalization in the world, Nvidia is currently operating in a “different galaxy.”

Nvidia shares have risen more than 40% this year, and Aya warns against comparing the AI leader to traditional chipmakers. A regular chip costs around $2.40, while an Nvidia graphics processor (GPU) costs around $30,000.

Despite concerns that Nvidia's market capitalization has reached the ceiling, Bank of America indicated its free cash flow (which is expected to reach $500 billion over the next three years) and a “still very cheap” valuation after adjusting for growth factors.

Nvidia's price-earnings ratio (PEG) is about 0.6 times; in contrast, the S&P 500 index, which has a price-earnings ratio of nearly 2 times, is expensive.” “Valuation is based on opinions,” Aya said.

If Nvidia is the brain of AI, then Broadcom is the nervous system. Broadcom's stock price has risen more than 50% this year, and it has transformed from a component supplier to a mainstay of AI infrastructure, with a market capitalization of $1.6 trillion. This shift is due to its custom application-specific integrated circuits (ASICs) for hyperscale companies such as Google (GOOGL.US) and Meta (META.US). As these giants work to reduce their reliance on Nvidia, they are turning to Broadcom.

Other Wall Street agencies have similar views. Goldman Sachs analyst James Schneider sees Broadcom as a key arms dealer in the AI craze in a research report. Schneider offered a target price of $450, emphasizing the company's unique ability to dominate the custom chip field, and pointing out that expanding cooperation with AI companies such as Anthropic and OpenAI brings further “upside”.

Despite optimism, Aya admits that the path to $1 trillion will be “bumpy” and that no stock is “risk-free”. However, the reason he chose these six companies as his top choice for 2026 is precisely because of their dominant market share, which generally remains between 70% and 75%.

“Look at leaders in any part of the tech sector, and you'll usually find that leaders have that kind of market share,” Aya concluded. It's actually the norm.”