Investing.com — Deutsche Bank analysts outlined their semiconductor outlook for 2025, highlighting a mix of opportunities in artificial intelligence (AI) and broad-based semiconductors.
The bank said in a research memo that it expects 16% year-over-year growth in the ex-memory semiconductor sector, up from 8% in 2024, with AI continuing to dominate but broader recovery emerging in other subsectors.
“On the AI front, we expect GPU-based accelerators to deliver yet another year of outsized growth (led by NVDA, and somewhat AMD (NASDAQ:)), with ASICs and Networking players also contributing (AVGO, NXPI, ALAB, etc.),” said the bank.
They believe that “hyperscaler capex growth” and technological advancements will sustain AI-related demand.
In the broader semiconductor space, Deutsche Bank (ETR:) expects incremental improvement as the industry rebounds from cyclical lows in 2024. Among these names, NXP Semiconductors (NASDAQ:) and ON Semiconductor (NASDAQ:) are said to stand out for their structural improvements, conservative growth expectations, and attractive valuations.
Deutsche Bank’s analysts highlight that investors should focus on companies positioned at the lower end of the growth spectrum but with strong potential for upside.
Despite recent underperformance of the Philadelphia Semiconductor Index (SOX) compared to the (-6% in 2024), Deutsche Bank sees this as setting a “reasonable bar” for 2025, with cautious optimism driven by improving fundamentals.
However, they highlight challenges such as muted macroeconomic conditions, geopolitical uncertainties, and elevated valuations persist.
For investors, the firm recommends maintaining selectivity, with a preference for stocks like NXPI and ON in the broad-based space and AVGO and MRVL in the AI domain. These companies are seen as well-positioned to capitalize on growth acceleration and evolving industry dynamics.
