Bank of America’s recent stance on semiconductor stocks
A Bank of America Merrill Lynch (BAC) research team recently shared its ideas on semiconductor stocks and its optimism for their future performances.
Analyst Vivek Arya wrote in the report, “We continue to be positive on the ‘golden age’ for semis, where cyclical reflation, secular drivers and discipline will drive earnings growth and attract new investors.”
Cyclical reflation is a process in which policymakers try to stimulate the economy by introducing changes and new legislation. The current administration is focusing on expanding economic activity through proposed tax reforms and fiscal stimulus (SPY) (QQQ). If the corporate and individual tax rates are reduced, it could stimulate economic growth.
Secular drivers aren’t cyclical but generally exist for a long period of time. They can include changes in demographics, which can be an important driver for global markets (ACWI) (VTI), and demand for technology (XLK).
According to Bank of America Merrill Lynch, all these factors could drive the earnings of semiconductor stocks and provide opportunities for investors.
In the next part of this series, we’ll look at Bank of America Merrill Lynch’s view on Broadcom (AVGO).