BofA Securities: AI industry shifts from proving investment returns to addressing chip and power constraints; raises 2030 global semiconductor TAM to $3.2 trillion

BofA Securities stated in a research report that it reiterates the thesis that the AI industry is shifting from proving investment returns to addressing structural and physical constraints such as chips and power; the memory chip shortage and price increases remain key levers driving upside growth for the industry, while the outlook for AI and servers is also becoming clearer. The bank noted that semiconductor stock valuations remain attractive, but it maintains a cautious stance before the midterm elections and until macroeconomic concerns ease. The bank said that, driven by memory and data centers, combined with a recovery in the automotive and industrial sectors, it has raised its 2030 global semiconductor total addressable market (TAM) forecast from $2.7 trillion to $3.2 trillion, implying an 18% compound annual growth rate from 2026 to 2030. On wafer fab equipment (WFE), BofA Securities raised its 2026 WFE TAM forecast by 8% from $144 billion to $156 billion, a year-on-year increase of 33%; its 2027 and 2028 WFE forecasts were raised to $210 billion and $270 billion, respectively, and are expected to reach $360 billion by 2030, implying a 23% compound annual growth rate from 2026 to 2030. The bank believes that although the market is concerned that AI infrastructure investment may slow, customer orders, long-term agreements, capacity commitments, and semiconductor pricing show no signs of slowing. Capacity across compute, networking, and memory suppliers has largely been booked or contracted for 2027, and is expected to remain tight in 2028.