The semiconductor industry is entering a new phase of explosive growth as AI demand shifts from training to inference, according to Wells Fargo.
In a new CNBC interview, Wells Fargo senior equity analyst Aaron Rakers says the firm now expects the chip sector to cross a historic revenue milestone as AI workloads proliferate across the economy.
“We forecasted this morning that the semiconductor industry could grow to a trillion dollars plus in revenue or in sales this year. That’s up 29% year-over-year. And we’re forecasting another double-digit growth into 2027.”
Rakers says the driver of that expansion is a structural transition inside AI infrastructure, as spending moves beyond training models toward large-scale inference deployment. Inference is the process of running a trained AI model to make predictions on new, unseen data.
“So I think we’re still moving from heavy-AI training investment cycle to inferencing starting to proliferate, and that’s carrying the chip sector.”
He pointed to Taiwan Semiconductor Manufacturing Company (TSMC) as evidence that AI demand remains broad-based and accelerating.
“You mentioned earlier TSMC’s results, obviously very robust. I think they talked about a mid-to-high 50% compound annual growth rate in their AI semiconductor forecast from 24 through 2029, which was an uptick from their prior outlook.”
Against that backdrop, Rakers says Wells Fargo upgraded several chip names, including a notable shift in its top pick.
“We did move to overweight on Broadcom this morning, and we put AMD as our top pick.”
Rakers says Broadcom’s (AVGO) recent underperformance has created an attractive entry point as the company expands its role in custom AI silicon.
“I think the stock has underperformed since they reported in December. Trades at a low 20s multiple on our updated calendar 2027 EPS estimate. And we want to be involved in this name as they diversify their customer AI base of business as we move forward. Obviously a lot of that today is driven by Google’s TPU. But you’ve got opportunities with Anthropic, OpenAI, Meta and others to come into the play or come into the story as we move through 2026.”
Wells Fargo has a price target of $430 for AVGO. At time of publishing, AVGO is trading at $343.
Rakers also reiterated Wells Fargo’s long-standing bullish view on Nvidia, saying recent conversations reinforced confidence in the company’s positioning.
“We’ve been consistently overweight Nvidia. I think they’re going to have a good print this next cycle. We came out of a meeting with the company last week at CES and demand sounds very, very robust. This notion of extreme co-design up and down the stack, I think, makes them a clear differentiated platform provider. So we continue to like that name as well.”
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