Bank of America believes artificial intelligence will accelerate growth across the semiconductor industry, helping generate an additional $1 trillion in chip sales over the next five years and reshaping several key technology markets in the process.
“The chip industry took ~50 years to generate its first $1Tn in sales,” analysts led by Vivek Arya wrote. “We expect AI to help add another $1Tn in just the next five years.”
Five Major Themes Expected to Fuel Industry Expansion
BofA identified five structural trends that it believes will drive the next phase of semiconductor growth.
The first is the rapid expansion of AI-focused data centre infrastructure. The bank estimates the total addressable market for AI data centre systems could grow from approximately $273 billion in 2025 to $1.7 trillion by 2030.
Memory remains another key growth engine, supported by long-term supply agreements and strong demand visibility.
The third theme centres on semiconductor manufacturing equipment and reshoring initiatives, as rising chip complexity increases investment requirements across fabrication facilities.
Analog semiconductors are also expected to benefit from growing power demands linked to AI workloads, while demand for next-generation CPUs designed to support agentic AI applications represents another major opportunity.
BofA estimates the server CPU market tied to agentic AI could eventually represent a $170 billion opportunity across x86 and ARM-based architectures.
Industry Forecast Raised to $2.7 Trillion by 2030
Reflecting these trends, the bank increased its forecast for total semiconductor industry revenue to $2.7 trillion by 2030, up from a previous estimate of $2.3 trillion.
The revised outlook implies a compound annual growth rate of approximately 28% from 2025 levels.
Among all semiconductor categories, memory is expected to deliver the strongest growth, with BofA forecasting nearly 300% year-over-year expansion in 2026.
Equipment Spending Forecasts Move Higher
The bank also substantially increased its projections for wafer fabrication equipment spending.
BofA now expects industry spending on wafer fab equipment to reach $250 billion by 2028, compared with its previous forecast of $203 billion. By 2030, annual spending could climb to approximately $292 billion.
The increase reflects expectations for continued investment in advanced manufacturing capacity needed to support AI-driven demand.
Micron Leads a Series of Higher Price Targets
Alongside its updated industry outlook, BofA revised several semiconductor stock price targets upward.
The largest increase was for Micron (NASDAQ:MU), where the target rose to $1,500 from $950. The bank cited strong demand for high-bandwidth memory and supply constraints that could persist through 2028.
Applied Materials (NASDAQ:AMAT) saw its target increased to $720 from $540, while Lam Research (NASDAQ:LRCX) was lifted to $480 from $330 and KLA Corporation (NASDAQ:KLAC) to $317 from $210.
Marvell (NASDAQ:MRVL) received a new target of $365, up from $240, supported by growing demand for AI connectivity solutions.
Meanwhile, Intel (NASDAQ:INTC) saw its target raised to $160 from $135 as the bank highlighted opportunities in server processors and foundry services.
Credo Technology (NASDAQ:CRDO) also received a higher target, increasing to $340 from $252.
One Notable Exception
Despite the broadly positive outlook, BofA maintained a more cautious stance on Axcelis Technologies (NASDAQ:ACLS).
Although the bank raised its target price to $156 from $130, it retained an Underperform rating, arguing that the stock already reflects much of the potential upside associated with its planned merger with Veeco.
Marvell Technology stock price