SKN | BMO Identifies Its Preferred Semiconductor Leaders as AI Investment Accelerates

Key Takeaways:

• BMO Capital Markets has initiated coverage across semiconductor and quantum-computing companies, with a constructive view on the sector.
• The bank favors companies with direct exposure to artificial intelligence infrastructure, including Nvidia, Broadcom and Micron.
• BMO also sees improving conditions in analog semiconductors as the broader industry moves beyond the post-COVID downturn.
• The bank’s analysis highlights the continuing importance of AI-related capital expenditure for semiconductor demand and long-term industry capacity.

BMO Capital Markets has opened a new chapter in its semiconductor research coverage with an upbeat assessment of the industry, placing particular emphasis on companies positioned to benefit from sustained artificial intelligence infrastructure spending. For sophisticated investors, the significance is less about individual price targets and more about how a major financial institution is positioning the next phase of semiconductor growth.

BMO Places AI Infrastructure at the Center of Semiconductor Growth

BMO initiated Nvidia with an Outperform rating and identified the company as its preferred large-cap semiconductor name. Analyst Harsh Kumar cited strong demand for Nvidia’s AI systems, with the company described as fully booked for the next 12 months. The next-generation Vera Rubin NVL72 system is also expected to begin ramping in the second half of the year.

Broadcom received the same Outperform designation, with BMO emphasizing its position in custom application-specific integrated circuits and AI networking. Micron was also initiated at Outperform, reflecting BMO’s expectation for a memory-market supercycle supported by strong high-bandwidth memory demand and constrained supply.

Why BMO Sees a Broader Semiconductor Recovery

The bank’s assessment extends beyond the highest-profile AI beneficiaries. BMO initiated Analog Devices, Microchip and Impinj at Outperform, identifying Analog Devices as its preferred analog semiconductor company. Improving bookings and a book-to-bill ratio above one were cited as evidence that demand conditions are strengthening.

Memory is another important part of the bank’s thesis. BMO estimates that the DRAM and NAND market could expand from $215 billion in 2025 to $780 billion in 2026, while limited new capacity before 2027 could keep supply conditions tight. This dynamic matters because semiconductor cycles can shift rapidly when capacity, pricing and end-market demand move out of balance.

The Banking Signal Behind BMO’s Positioning

For global wealth holders, BMO’s research provides a useful read on how institutional capital is viewing the technology investment cycle. The bank is effectively distinguishing between companies benefiting from structural AI demand and those relying primarily on a cyclical semiconductor recovery.

BMO’s quantum-computing coverage also reflects this selective approach. The firm initiated D-Wave at Outperform, while maintaining a more cautious Market Perform stance on Skyworks pending greater visibility around its acquisition of Qorvo.

The broader message is that AI infrastructure spending remains central to BMO’s semiconductor outlook. Kumar characterized the AI opportunity as being in its early stages, with token demand continuing to drive infrastructure requirements. For investors evaluating technology exposure within diversified global portfolios, the distinction between durable infrastructure demand and shorter-term semiconductor cycles will remain critical.

For a confidential discussion regarding global technology exposure, portfolio diversification and cross-border wealth structures, contact our senior advisory team.