BofA flags attractive compute valuations, highlights 4 key stocks

Investing.com -- Bank of America said compute-focused chipmakers look increasingly attractive as valuations remain well below historical levels, even as artificial intelligence investment accelerates.

In a note on Monday, BofA described the semiconductor landscape as a mix of “stretched semicaps, compelling compute, [and] half-full analog,” with analyst Vivek Arya highlighting the relative value in four key compute names.

BofA said its preferred compute stocks, Nvidia, Broadcom, AMD and Credo, are projected to grow sales at an average 42% and adjusted EPS at 49% from 2025 to 2027, yet trade at “a 24x CY27 PE or just 0.5x PEG ratio.”

According to BofA, that “suggest[s] a notably compelling valuation backdrop” compared with other areas of the chip sector.

The firm expects large cloud providers to reaffirm “the mission-critical need to invest in compute infra,” supporting double-digit sales growth.

BofA also pointed to cloud spending momentum, noting its tracker suggests 38% year-over-year growth in 2026 cloud capex, with potential revisions “towards 50%+ exiting the year.” Despite rising investment, “FCF in aggregate is still positive,” BofA believes.

BofA “expects cloud AI earnings/NVDA’s GTC show (Mar 16-19) anticipation to reenergize the group.”

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