Bernstein reveals top picks in European semiconductor stocks for 2025

As of December 26, 2024, analysts predict significant growth for several companies within the Dow Jones Industrial Average for the upcoming year. Nvidia and Merck are particularly noted for their potential upside, with forecasts indicating increases of 28% and 32% respectively. Despite challenges in market performance in December 2024, these companies are demonstrating resilience due to their strong product lines and promising pipelines. Merck's success is bolstered by robust sales of its cancer drug Keytruda, while Nvidia has emerged as a market leader in artificial intelligence-related sectors, capturing substantial growth in stock value throughout 2024. The broader context suggests that while the Dow has experienced some downturns, leading analysts remain optimistic about the prospects of certain stocks, particularly those in the pharmaceutical and technology sectors. Merck's recent drop of more than 8% year-to-date does not overshadow its future potential, as it continues to develop new drugs and maintain strong sales from existing products. Analysts from Bank of America have reinforced their positive outlook for Merck, referring to it as one of the best growth-at-a-reasonable-price (GARP) stocks in the pharmaceutical sector. For Nvidia, the company's stock price surged by over 180% during 2024, making it a frontrunner in the technology market, especially in the realm of artificial intelligence. Despite a recent market correction suggesting it might be overvalued, analysts have maintained a strong buy recommendation for Nvidia. Morgan Stanley’s analysts express confidence in Nvidia's long-term pricing power and market leadership in chip manufacturing. The overall sentiment within the investment community points to an expectation that these companies will not only recover from recent losses but will also thrive in the evolving market landscape, driven by innovation and heightened demand for their respective products. On the European front, Bernstein analysts convey a cautious outlook for the semiconductor sector in 2025, indicating a flat industry context with a return to growth anticipated in 2026. Nonetheless, they have identified opportunities in specific stocks such as BE Semiconductor Industries and Infineon Technologies. Both companies, despite recent disappointments in stock performance, are considered to have solid fundamentals and are poised for growth, especially with the increasing demand for semiconductor technologies in AI applications. These dynamics illustrate the ongoing challenges and opportunities within the global semiconductor industry while underscoring the confidence in strategic investments within established growth sectors.