Goldman Sachs reports that the semiconductor and semiconductor equipment sector offered significant opportunities for excess returns last year. Companies excelling in AI infrastructure, such as Credo Technology (CRDO), NVIDIA (NVDA, Financial), Broadcom (AVGO), Marvell Technology (MRVL), and Arm (ARM) saw impressive growth. For instance, CRDO grew 2.45 times, NVDA 1.71 times, AVGO 1.08 times, MRVL 83%, and ARM 64%. These returns significantly outperformed sectors like microcontrollers and power segments, where companies like Microchip Technology (MCHP), Qorvo (QRVO), ON Semiconductor (ON), and Skyworks (SWKS) experienced declines.
Looking ahead, Goldman Sachs suggests that investors hold both leading AI stocks and cyclical shares, as earnings in the AI field might moderate. The firm anticipates a positive earnings outlook for the semiconductor sector in the second half of the year. High potential "buy" rated stocks include NVDA, Broadcom, Lam Research (LRCX), Micron Technology (MU), Teradyne (TER), and Entegris (ENTG). The firm has upgraded NXP Semiconductors (NXPI) from "neutral" to "buy" and downgraded Advanced Micro Devices (AMD) from "buy" to "neutral".
