Bank of America expects artificial intelligence to dramatically accelerate semiconductor industry growth, helping generate an additional $1 trillion in revenue over the next five years.
“The chip industry took ~50 years to generate its first $1Tn in sales,” analysts led by Vivek Arya said. “We expect AI to help add another $1Tn in just the next five years.”
AI Infrastructure Leads Growth Outlook
According to BofA, AI data centre systems represent the largest opportunity, with the market expected to expand from roughly $273 billion in 2025 to approximately $1.7 trillion by 2030.
The bank also highlighted sustained strength in memory markets, increased demand for semiconductor manufacturing equipment, rising power requirements benefiting analog chipmakers, and growing demand for CPUs capable of supporting agentic AI workloads.
BofA estimates the emerging market for AI-focused server processors could eventually represent a $170 billion opportunity spanning both x86 and ARM architectures.
Semiconductor Revenue Forecast Increased
The firm raised its semiconductor industry forecast to $2.7 trillion by 2030, compared with a previous estimate of $2.3 trillion.
That outlook implies annual growth of roughly 28% from 2025 levels.
Memory remains BofA’s most bullish segment, with analysts projecting nearly 300% growth in 2026.
Equipment Spending Outlook Strengthens
The bank also lifted its forecasts for wafer fabrication equipment spending, now expecting annual investment to reach $250 billion by 2028 and potentially $292 billion by 2030.
The revised outlook reflects growing capital requirements as semiconductor manufacturing becomes increasingly complex and AI demand accelerates.
Price Targets Raised Across the Sector
Micron (NASDAQ:MU) received the largest target increase, rising to $1,500 from $950 as BofA pointed to strong high-bandwidth memory demand and constrained supply.
Applied Materials (NASDAQ:AMAT), Lam Research (NASDAQ:LRCX), KLA Corporation (NASDAQ:KLAC), Marvell (NASDAQ:MRVL), Intel (NASDAQ:INTC), and Credo Technology (NASDAQ:CRDO) also received higher targets as the bank incorporated stronger long-term growth assumptions.
Caution Remains on Axcelis
Axcelis Technologies (NASDAQ:ACLS) was the lone exception.
While BofA raised its target to $156 from $130, it maintained an Underperform rating, arguing that the stock’s valuation already reflects much of the expected benefit from its pending merger with Veeco.
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