① BofA analysts expect artificial intelligence to drive semiconductor sales to the next $1 trillion within five years, whereas the chip industry took about 50 years to achieve its first $1 trillion in sales.
② The report identifies five key factors that will drive semiconductor sales growth.
June 24 — Just as the market begins to panic that the “artificial intelligence (AI) bull market” has peaked, Bank of America (BofA) analysts released a new outlook stating that AI is expected to achieve within five years what the chip industry took half a century to accomplish. They noted that five key factors will drive semiconductor sales rapidly to the next $1 trillion.
In a new report, the team led by Vivek Arya stated: “The chip industry previously took about 50 years to achieve its first $1 trillion in sales. We expect AI to contribute another $1 trillion in sales over the next five years.”
The five “drivers” listed by the bank are as follows:
AI data center systems (with the potential market size expected to grow from $273 billion in 2025 to approximately $1.7 trillion in 2030);
Growth and market resilience in memory chip demand supported by long-term supply agreements;
Semiconductor capital equipment and industry reshoring benefiting from increasing chip complexity;
The analog chip market benefiting from the surge in AI computing power;
Demand for agent central processing units (BofA estimates this area will create $170 billion in server market space under the x86 and ARM architectures).
While updating its industry thematic report, BofA also raised its forecast for the total global semiconductor industry size in 2030 from $2.3 trillion to $2.7 trillion, corresponding to a compound annual growth rate of 28% from 2025 to 2030. Analysts believe memory chips will become the dominant segment, with BofA expecting the memory chip market size to increase by nearly 300% year-over-year in 2026 alone.
The bank also significantly raised its forecast for the wafer fab equipment (WFE) market size, now expecting related spending to reach $250 billion in 2028 (previously forecast at $203 billion), and possibly $292 billion in 2030.
Finally, in addition to updating its forecasts, BofA also adjusted the target prices for several stocks:
The most notable is Micron Technology, for which analysts raised the target price from $950 to $1,500, citing strong demand for high-bandwidth memory (HBM) and structurally constrained supply through 2028.
This assessment aligns closely with market trends: Deutsche Bank had previously raised its Micron price target from $1,000 to $1,500, while Citi lifted its target from $840 to $1,200.
Intel’s price target was raised from $135 to $160. This marks BofA’s second significant upward revision to Intel’s target in just two weeks. On June 11, BofA had upgraded Intel’s rating directly by two notches from “Underperform” to “Buy” and raised its price target from $96 to $135. The further increase to $160 reflects BofA’s sustained confidence in Intel’s server CPU business and foundry prospects.
Marvell Technology’s price target was raised from $240 to $365, primarily driven by strong AI connectivity demand.
Arm Holdings’ price target was raised from $335 to $460, although BofA maintained its “Neutral” rating. In mid-June, BofA had already raised Arm’s price target from $245 to $335.
In addition, Applied Materials’ price target was raised from $540 to $720, U.S. semiconductor equipment maker Lam Research from $330 to $480, and KLA from $210 to $317. All three companies benefit from upward revisions in wafer fabrication equipment demand.
Amid broadly bullish market sentiment, Axcelis Technologies stands as the sole exception. BofA raised its price target from $130 to $156 but maintained its “Underperform” rating, stating that even accounting for potential earnings accretion from its pending merger with Veeco, the stock’s current valuation has already fully reflected such positive factors.
