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Raymond James raises targets on chip stocks after a 'Silicon Valley Bus Tour'

Published 06/07/2024, 09:38 PM
© Reuters.
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As part of its "Silicon Valley Bus Tour" Raymond James met with key industry players. As a result, analysts at Raymond James boosted their outlook on chip stocks.

They met with AMD (NASDAQ:AMD), Lam Research (NASDAQ:LRCX), KLA Corporation (KLAC), and others, reporting that AI was the dominant theme in discussions.

"Overall business conditions appear stable, and managements were generally optimistic about Data Center demand heading into [the second half]," the analysts noted.

The aging server base also emerged as a point of interest, suggesting the potential for traditional server refresh cycles to drive demand.

Equipment-wise, Raymond James highlights continued strength in HBM (High Bandwidth Memory) spending, a recovery in advanced logic, and relatively stable demand from China.

Maintaining their Outperform ratings for AMD, LRCX, and KLAC, the analysts also raised their price targets for LRCX from $950 to $1,060 and KLAC from $750 to $875.

They cited expectations for strong semiconductor capital equipment sector fundamentals through 2025, fueled by four key factors: Secular growth driven by general artificial intelligence (Gen AI), aggressive government subsidies globally multiple technology transitions underway, and heightening competition among foundry suppliers.

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