Goldman Sachs reports that the semiconductor and semiconductor equipment sectors provided significant opportunities for excess returns last year. Companies with strong AI infrastructure have seen impressive growth, including Credo Technology (CRDO), NVIDIA (NVDA, Financial), Broadcom (AVGO), Marvell Technology (MRVL), and Arm (ARM). For example, CRDO increased by 2.45x, NVDA by 1.71x, AVGO by 1.08x, MRVL by 83%, and ARM by 64%. These gains significantly outpaced sectors such as the microcontroller and power segments, where companies such as Microchip Technology (MCHP), Qorvo (QRVO), ON Semiconductor (ON), and Skyworks (SWKS) experienced declines.
Looking ahead, Goldman Sachs suggests investors hold both major AI stocks and cyclical stocks, as earnings in the AI space may slow. The company expects a positive earnings outlook for its semiconductor division in the second half of this year. Stocks with a likely “buy” rating include NVDA, Broadcom, Lam Research (LRCX), Micron Technology (MU), Teradyne (TER), and Entegris (ENTG). The company upgraded NXP Semiconductors (NXPI) from “neutral” to “buy” and downgraded Advanced Micro Devices (AMD) from “buy” to “neutral.”
