These 6 stocks will lead the $1 trillion chip surge in 2026, BofA says

Core Insights - The artificial intelligence industry is experiencing significant growth, with Bank of America analyst Vivek Arya stating that it is only at the "midpoint" of a decade-long transformation, primarily driven by Nvidia and Broadcom [1] - Arya forecasts a 30% year-over-year increase in global semiconductor sales, projecting the sector will surpass $1 trillion in annual sales by 2026 [2] - Companies with strong margin structures are favored, with Nvidia, Broadcom, Lam Research, KLA, Analog Devices, and Cadence Design Systems identified as top picks for 2026 [3] Semiconductor Market Outlook - Arya emphasizes that investing in semiconductors is straightforward, recommending investors sort companies by gross margins and select the top five [4] - The total addressable market for AI data center systems is expected to exceed $1.2 trillion by 2030, with a compound annual growth rate of 38%, and AI accelerators alone representing a $900 billion opportunity [4] Investment Considerations - Despite high capital expenditures for AI data centers, estimated at $60 billion for a typical 1 gigawatt facility, Arya remains optimistic about the necessity of investment for Big Tech to protect their market positions [5] - Nvidia is highlighted as operating in a "different galaxy," with its shares up over 40% year-to-date, and its GPUs priced significantly higher than average chips [6] - Bank of America projects Nvidia's free cash flow to reach half a trillion dollars over the next three years, indicating a valuation that remains attractive when adjusted for growth [7]