These Chipmakers Could Benefit From Record 2024 Data Center Spending, BofA Says

Cloud computing giants for illustration Microsoft (MSFT) and Amazon (AMZN) are group to walk a grounds magnitude connected infrastructure successful 2024, pinch chipmakers apt to use from nan title to build retired artificial intelligence (AI) information centers, according to Bank of America analysts.

The analysts estimated unreality work supplier capital expenditures will deed $121 cardinal successful nan 2nd half of 2024, bringing nan year's full to a grounds $227 billion. That would correspond a 39% summation from past year.

Among nan largest U.S. providers, Alphabet (GOOGL), Microsoft, and Meta (META) are expected to walk much than doubly arsenic overmuch arsenic they did successful 2020, while Oracle (ORCL) could boost capex astir sixfold. The information of that spending going toward information centers—already astir 55%—is expected to proceed to rise.

Which Chipmakers Stand To Benefit

Major beneficiaries of that spending are apt to beryllium semiconductor companies for illustration Nvidia (NVDA), nan analysts said. Nvidia commands a much than 80% stock of nan AI accelerator market, which BofA forecasts will turn from $100 cardinal coming to $200 cardinal successful 2027. The analysts expect nan chipmaker to support its power passim nan existent capex upcycle.

"Overall, we judge those highly exposed to information center/AI extremity markets should mostly fare better," nan analysts wrote. Other apical picks see Broadcom (AVGO), Micron (MU), and Arm (ARM).

Intel (INTC), meanwhile, is forecast to dramatically way its peers successful position of vulnerability to information halfway spending. With 23% of income coming from information centers successful 2023, it is nan spot institution analyzed by BofA pinch nan slightest vulnerability to AI. That fig is expected to inch up to conscionable 25% successful 2026.