Bank of America Raises AI Data Center Market Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Should l Buy AVGO?
Source: Benzinga
- Optimistic Market Outlook: Bank of America analyst Vivek Arya raised the 2030 market size forecast for AI data center systems from $1.2 trillion to $1.4 trillion, reflecting strong expectations for 2026 cloud capex, thereby boosting confidence in semiconductor stocks.
- Accelerated Growth Projections: The overall data center systems market is expected to grow at a 64% year-over-year rate in 2026, while AI systems are projected to achieve a remarkable 100% growth rate, indicating significant market expansion driven by new accelerator deployments.
- Reduced Supply Risks: Arya noted that the anticipated supply growth for High-Bandwidth Memory (HBM) and Chip-on-Wafer-on-Substrate (CoWoS) in 2026, projected at 75% and 70% year-over-year respectively, has largely been allocated, thus mitigating near-term supply risks and ensuring margin protection.
- Company-Specific Estimates Adjusted: For Nvidia, Arya raised revenue estimates by 7% for fiscal 2027, anticipating $0.5 trillion in sales visibility through 2026, while also adjusting Marvell's revenue estimates post-XConn acquisition, although visibility on next-gen programs remains limited until 2027.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 325.170
Low
370.00
Averages
457.75
High
525.00
Current: 325.170
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Bank of America Raises AI Data Center Market Outlook
- Optimistic Market Outlook: Bank of America analyst Vivek Arya raised the 2030 market size forecast for AI data center systems from $1.2 trillion to $1.4 trillion, reflecting strong expectations for 2026 cloud capex, thereby boosting confidence in semiconductor stocks.
- Accelerated Growth Projections: The overall data center systems market is expected to grow at a 64% year-over-year rate in 2026, while AI systems are projected to achieve a remarkable 100% growth rate, indicating significant market expansion driven by new accelerator deployments.
- Reduced Supply Risks: Arya noted that the anticipated supply growth for High-Bandwidth Memory (HBM) and Chip-on-Wafer-on-Substrate (CoWoS) in 2026, projected at 75% and 70% year-over-year respectively, has largely been allocated, thus mitigating near-term supply risks and ensuring margin protection.
- Company-Specific Estimates Adjusted: For Nvidia, Arya raised revenue estimates by 7% for fiscal 2027, anticipating $0.5 trillion in sales visibility through 2026, while also adjusting Marvell's revenue estimates post-XConn acquisition, although visibility on next-gen programs remains limited until 2027.
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- Financial Performance: While Alphabet's recent earnings report showcased strong revenue and earnings-per-share growth, particularly in Search and Google Cloud, the ambitious capital expenditure plans are causing free cash flow to decline, projected to drop to about $33 billion in 2026.
- Capital Expenditure Plans: Alphabet intends to spend between $175 billion and $185 billion in capital expenditures by 2026, significantly exceeding Wall Street's estimate of $115 billion, which has unsettled the market and impacted the performance of major tech stocks.
- Cloud Growth: Google Cloud's backlog has grown by 55% year-over-year to $240 billion, indicating a growing market share, and while free cash flow faces pressure, the increase in AI-driven search revenue provides new growth momentum for the company.
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- Semiconductor Industry Outlook: Despite market volatility, the semiconductor sector remains robust, with global chip sales reaching $791.7 billion in 2025 and projected to grow by 26% in 2026, positioning the industry to approach $1 trillion in annual revenue.
- Accelerating Data Center Demand: SIA CEO John Neuffer highlighted that increasing demand for data centers is driving growth in the semiconductor industry, while also noting that cyclical fluctuations are likely to persist, reflecting the dynamic nature of the market.
- Nvidia Earnings Focus: Nvidia is set to report earnings on February 25, 2026, and despite recent stock weakness, analysts like Jim Cramer have dubbed it the “GOAT,” emphasizing its competitive position and resilience in the market.
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Three Tech Stocks Poised for Growth Over Next Five Years
- AI-Driven Growth: Nvidia, Taiwan Semiconductor, and Broadcom are positioned crucially in the AI sector, expected to benefit from a surge in data center spending over the next five years, driving significant stock price increases.
- Taiwan Semiconductor Revenue Forecast: Taiwan Semiconductor anticipates its AI-related chip revenue will grow at nearly a 60% compound annual growth rate, indicating strong market demand and future profitability potential.
- Broadcom Price Target: Broadcom's average one-year price target is $460, requiring only a 47% increase to reach the $500 target, with expectations of achieving this within the next two years.
- Nvidia's Challenge: Although Nvidia needs to rise 163% to hit $500, with data center spending projected to reach $3 trillion, Nvidia has the potential to achieve this target within five years, possibly exceeding it.
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Stock Performance: Nvidia's stock was slightly declining early Tuesday.
Analyst Outlook: A positive assessment from a Wall Street analyst is expected to reassure investors.
AI Chip Efficiency: The company reported impressive efficiency metrics for its artificial intelligence chips.
Investor Sentiment: Overall, the combination of analyst support and strong chip performance should bolster investor confidence.
See More
2026 Data Center Construction Boom Ahead
- Surge in AI Spending: Spending on artificial intelligence is projected to reach new heights by 2026, driving significant growth for Nvidia, Broadcom, and Taiwan Semiconductor, making them top picks for investors looking to capitalize on this trend.
- Capital Expenditure Forecast: Amazon, Alphabet, and Meta are expected to collectively invest over $500 billion in 2026 for data center construction and equipment purchases, with Nvidia and Broadcom benefiting significantly as chips account for nearly half of data center construction costs.
- Significant Growth Potential: Nvidia forecasts that global data center capital expenditures will reach $3 trillion to $4 trillion annually by 2030, indicating immense future demand for infrastructure, which could drive stock prices of related companies higher.
- Market Valuation Lag: Despite Nvidia, Broadcom, and Taiwan Semiconductor being projected to achieve impressive revenue growth, the market has not assigned them significant premiums, with Nvidia expected to grow 64% in fiscal 2027, while Broadcom and Taiwan Semiconductor are projected to grow 51% and 34%, respectively.
See More
Bank of America Raises AI Data Center Market Outlook
- Optimistic Market Outlook: Bank of America analyst Vivek Arya raised the 2030 market size forecast for AI data center systems from $1.2 trillion to $1.4 trillion, reflecting strong expectations for 2026 cloud capex, thereby boosting confidence in semiconductor stocks.
- Accelerated Growth Projections: The overall data center systems market is expected to grow at a 64% year-over-year rate in 2026, while AI systems are projected to achieve a remarkable 100% growth rate, indicating significant market expansion driven by new accelerator deployments.
- Reduced Supply Risks: Arya noted that the anticipated supply growth for High-Bandwidth Memory (HBM) and Chip-on-Wafer-on-Substrate (CoWoS) in 2026, projected at 75% and 70% year-over-year respectively, has largely been allocated, thus mitigating near-term supply risks and ensuring margin protection.
- Company-Specific Estimates Adjusted: For Nvidia, Arya raised revenue estimates by 7% for fiscal 2027, anticipating $0.5 trillion in sales visibility through 2026, while also adjusting Marvell's revenue estimates post-XConn acquisition, although visibility on next-gen programs remains limited until 2027.
See More
Jim Cramer Increases Alphabet Holdings Amid Market Pullback
- Increased Holdings: Jim Cramer's Charitable Trust is purchasing 50 shares of Alphabet at approximately $301 each, raising its stake from 1.15% to 1.55%, reflecting confidence in Alphabet's future growth potential.
- Financial Performance: While Alphabet's recent earnings report showcased strong revenue and earnings-per-share growth, particularly in Search and Google Cloud, the ambitious capital expenditure plans are causing free cash flow to decline, projected to drop to about $33 billion in 2026.
- Capital Expenditure Plans: Alphabet intends to spend between $175 billion and $185 billion in capital expenditures by 2026, significantly exceeding Wall Street's estimate of $115 billion, which has unsettled the market and impacted the performance of major tech stocks.
- Cloud Growth: Google Cloud's backlog has grown by 55% year-over-year to $240 billion, indicating a growing market share, and while free cash flow faces pressure, the increase in AI-driven search revenue provides new growth momentum for the company.
See More
Reassessment of AI Spending Impacts Major Tech Stocks
- Market Value Loss: In 2026, major tech companies including Microsoft, Amazon, Nvidia, Apple, and Alphabet saw a combined market value drop of over $1.3 trillion due to a reassessment of AI spending, indicating investor caution regarding elevated capital expenditure plans.
- Semiconductor Industry Outlook: Despite market volatility, the semiconductor sector remains robust, with global chip sales reaching $791.7 billion in 2025 and projected to grow by 26% in 2026, positioning the industry to approach $1 trillion in annual revenue.
- Accelerating Data Center Demand: SIA CEO John Neuffer highlighted that increasing demand for data centers is driving growth in the semiconductor industry, while also noting that cyclical fluctuations are likely to persist, reflecting the dynamic nature of the market.
- Nvidia Earnings Focus: Nvidia is set to report earnings on February 25, 2026, and despite recent stock weakness, analysts like Jim Cramer have dubbed it the “GOAT,” emphasizing its competitive position and resilience in the market.
See More
Three Tech Stocks Poised for Growth Over Next Five Years
- AI-Driven Growth: Nvidia, Taiwan Semiconductor, and Broadcom are positioned crucially in the AI sector, expected to benefit from a surge in data center spending over the next five years, driving significant stock price increases.
- Taiwan Semiconductor Revenue Forecast: Taiwan Semiconductor anticipates its AI-related chip revenue will grow at nearly a 60% compound annual growth rate, indicating strong market demand and future profitability potential.
- Broadcom Price Target: Broadcom's average one-year price target is $460, requiring only a 47% increase to reach the $500 target, with expectations of achieving this within the next two years.
- Nvidia's Challenge: Although Nvidia needs to rise 163% to hit $500, with data center spending projected to reach $3 trillion, Nvidia has the potential to achieve this target within five years, possibly exceeding it.
See More
Nvidia Shares Decline: Two Reasons to Remain Optimistic About Its AI Chips.
Stock Performance: Nvidia's stock was slightly declining early Tuesday.
Analyst Outlook: A positive assessment from a Wall Street analyst is expected to reassure investors.
AI Chip Efficiency: The company reported impressive efficiency metrics for its artificial intelligence chips.
Investor Sentiment: Overall, the combination of analyst support and strong chip performance should bolster investor confidence.
See More
2026 Data Center Construction Boom Ahead
- Surge in AI Spending: Spending on artificial intelligence is projected to reach new heights by 2026, driving significant growth for Nvidia, Broadcom, and Taiwan Semiconductor, making them top picks for investors looking to capitalize on this trend.
- Capital Expenditure Forecast: Amazon, Alphabet, and Meta are expected to collectively invest over $500 billion in 2026 for data center construction and equipment purchases, with Nvidia and Broadcom benefiting significantly as chips account for nearly half of data center construction costs.
- Significant Growth Potential: Nvidia forecasts that global data center capital expenditures will reach $3 trillion to $4 trillion annually by 2030, indicating immense future demand for infrastructure, which could drive stock prices of related companies higher.
- Market Valuation Lag: Despite Nvidia, Broadcom, and Taiwan Semiconductor being projected to achieve impressive revenue growth, the market has not assigned them significant premiums, with Nvidia expected to grow 64% in fiscal 2027, while Broadcom and Taiwan Semiconductor are projected to grow 51% and 34%, respectively.
See More
