Semiconductor sales could approach $1T by 2027, BofA says

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Amid surging demand related to all things artificial intelligence, semiconductor sales could reach roughly $1T by 2027, Bank of America said, up from its prior view of $860B.

“We flag materially higher growth outlook in memory (across HBM, commodity DRAM, and NAND), as well as in data center/AI-related components, modestly offset by consumer/auto,” analysts at the firm wrote in a note to clients.

The analysts continued: “... [We] continue to believe the current AI [infrastructure] build out is structurally more durable than prior large cycles and remain bullish on AI capex.”

Breaking it down, the firm sees industry sales of $745B, $870B and $971B in 2025, 2026 and 2027, respectively, up roughly between 3% and 6% than it previously forecast. Excluding memory, sales are expected to be around $538B, $621B, and $706B, respectively.

The firm reiterated its top five stock picks in the space: Nvidia (NASDAQ:NVDA [https://seekingalpha.com/symbol/NVDA]), Broadcom (NASDAQ:AVGO [https://seekingalpha.com/symbol/AVGO]), AMD (NASDAQ:AMD [https://seekingalpha.com/symbol/AMD]), Lam Research (NASDAQ:LRCX [https://seekingalpha.com/symbol/LRCX]) and KLA Corp. (NASDAQ:KLAC [https://seekingalpha.com/symbol/KLAC]), citing their respective leverage towards “the strong data center and memory spend outlook.”

In addition to strong chip sales, Bank of America's analysts updated their views on semiconductor equipment spending as well, as the firm now sees $118B, $128B and $138B in spending between 2025 and 2027. While 2026 and 2027 could see a lower intensity outlook, that's in line with the firm's view that there will be “sustainable” chip equipment spending growth over the next few years.

“Longer-term, we believe capital intensity could settle at 14-17% range, 100-400 [basis points] above historical 13% average as manufacturing complexity for semis has increased. Data center/AI up, consumer/auto down vs. [the prior view],” the analysts added.

The analysts continued : “Our new industry model highlights much faster growth in memory and data center/AI, modestly offset by slower recovery in consumer, PC, smartphone, and auto end markets. Notably, we now see data center-related components such as servers (silicon only) and wired infrastructure to grow +55%/+28% [year-over-year], respectively in CY25E, with YoY growth broadening out to all end markets in CY26/27E on broader cyclical recovery.”

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