Jefferies named three investment ideas for 2026 in the semiconductor sector. Who is the favorite?
Among the top three stocks, according to the investment bank, are not only the market leaders, but also a lesser-known player
Analyst Blaine Curtis of Jefferies has identified the three most promising semiconductor stocks for next year. They offer attractive buying opportunities even after the sector's strong growth, he believes. "We remain a bet on AI in 2026 as [specialized chip] ASICs enter an accelerated growth phase and hyperscaler capital spending increases," the analyst wrote in a note cited by Barron's. Here are the stocks he picked.
Broadcom
Chipmaker Broadcom, which competes with Nvidia, was named by Curtis as his top pick in the semiconductor sector. The analyst's price target for the stock implies a 47% upside of $500 versus $339 at the last close on Dec. 15.
Curtis expects demand for Broadcom's products to exceed expectations, not only due to the demand for custom ASIC processors, which cost less than Nvidia's general-purpose GPU solutions, but also due to the growth potential in the networking chip segment.
Broadcom posted a strong quarterly report last week, reporting earnings and revenue above Wall Street forecasts, but uncertainty about the size and mix of future orders disappointed the market, becoming one of the reasons the entire sector collapsed on Friday. Broadcom itself saw its worst three-day decline since March 2020, losing a combined 17.7%, according to Dow Jones Market Data cited by MarketWatch. In trading on December 16, securities of the chipmaker fell 0.6%.
Nvidia
Despite the recent volatility in Nvidia stock, Curtis remains optimistic about it. His $250 target is 42% above the company's closing price on December 15. The Jefferies analyst called the market's fears of a slowdown in the AI sector "largely exaggerated." Deployment of new Blackwell Ultra chips is on track, and the next generation of Rubin processors is scheduled for release in the second half of 2026, he recalled.
Nvidia shares were up about 0.3% in trading on Dec. 16.
KLA
Less known to the general public, KLA produces equipment for testing semiconductors for defects in the manufacturing process, with about 50% of this market,according to Guru focus. The growing demand for AI chips will increase the costs of its products, the analyst explains. He upgraded the company's rating from a neutral "hold" to a buy recommendation on these securities and expects them to rise 22%, according to his $1500 target price.
KLA stock lost 0.4% of its value on Dec. 16.
What other analysts are saying
Wall Street recommends buying Broadcom shares almost unanimously, MarketWatch shows : 46 analysts out of 50. The remaining four advise holding the chipmaker's stock. The average target price of $466 implies a potential upside of 37% from the last close.
The attitude to Nvidia is also optimistic: 40 analysts are bullish, five are neutral, and only one recommends the securities of the leading chipmaker to sell, follows from the data of MarketWatch. The consensus target of $257 promises a 46% increase, the best of the three.
Wall Street is taking a more cautious view on KLA, with 13 analysts recommending buying its shares, 17 recommending a hold, and one recommending a sell. The average target price is $1326.7 and is 8% higher than current quotes.
This article was AI-translated and verified by a human editor
