Analysts from Bank of America and Cowen have identified their top semiconductor stocks to play the electric vehicle boom, as the auto sector undergoes a "dramatic transformation." "We believe the speed of EV penetration into next-gen vehicles will take place faster than is widely appreciated," Cowen's analysts said in a March 24 note to investors. They added that the automotive industry is "going through the most dramatic transformation in its history, driven by the simultaneous disruptive forces of electrification and intelligence/autonomy." The number of electric vehicles on the road is expected to hit 145 million globally by 2030 , according to the International Energy Agency. Semiconductors are a key component of EVs and the industry is booming as automakers expand their production . Cowen said EV production is likely to get a boost as governments get behind a shift to more environmentally-friendly technology. BofA, meanwhile, noted a "significant reshoring" in the industry as Europe looks to increase semiconductor production. Top picks The banks both chose German semiconductor manufacturer Infineon as a top pick. Cowen rated it outperform and described the company as having "a leading position within Electrification across high growth verticals including not only xEVs [hybrid or fully electric vehicles], but also renewables and the data center." Cowen also likes its semiconductor components business, which it described as having "unmatched breadth," including products such as power switches and transistors. BofA is buy-rated on Infineon, saying in a March 22 note that it likes its "strong" growth outlook and noting its recent underperformance as a buying opportunity. Cowen and BofA also chose French-Italian semiconductor maker STMicroelectronics as a favorite in the sector. "We continue to believe STMicro's technological portfolio and competitive positioning is overlooked by the Street," Cowen stated, rating the stock as outperform. "STMicro is investing in differentiated capabilities and manufacturing efficiencies that will allow the company to address high-growth and high margin applications." BofA has a buy rating on STMicro, liking its exposure to EVs as well as renewable energy. More buys from BofA The bank is buy-rated on ASML , describing it as a "market leader in key chipmaking technology," including lithography, an important part of manufacturing semiconductor wafers. BofA also said it has a monopoly on new technologies such as extreme ultraviolet, used in making complex chips. BofA also has a buy rating on ASM International , a supplier of semiconductor manufacturing equipment, saying it is set outperform the market. Another pick for the bank is Besi , a maker of equipment for the semiconductor assembly market. "Besi is the key enabler of hybrid bonding, the most advanced packaging technique for enabling advanced chips for AI, 5G etc," BofA's analysts stated.
A technologist inspects a computer chip.
Sefa Ozel | Getty Images
Analysts from Bank of America and Cowen have identified their top semiconductor stocks to play the electric vehicle boom, as the auto sector undergoes a "dramatic transformation."
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