Bank of America updated its outlook for the U.S. semiconductor sector, boosting its projected compound annual growth rate (CAGR) to 18% for the period 2026-2030 from an earlier estimate of 14%.
The bank now expects the total addressable market for semiconductors to reach $3.2 trillion by 2030, compared with a prior forecast of $2.7 trillion. The revision is driven primarily by stronger-than-expected prospects for memory chips and server components, the report said. Memory and data-center demand are identified as the principal engines of the upgrade, with a supplementary contribution anticipated from a recovery in automotive and industrial end markets.
According to the report, the industry reached $1 trillion in sales after 50 years of development. Bank of America projects that the current market size, estimated at $1.7 trillion, could double within four years under the revised growth trajectory.
Alongside the market-size adjustments, the bank raised its wafer fabrication equipment (WFE) estimates. It now forecasts WFE spending of $156 billion in 2026, revised up from $144 billion, which the bank characterizes as roughly a 33% year-over-year increase. The 2027 WFE forecast was lifted to $210 billion from $190 billion, reflecting a 34% annual gain.
Bank of America attributes these equipment increases largely to stronger memory equipment demand, with a particular emphasis on DRAM chips. For DRAM specifically, the bank projects equipment spending of $61 billion in 2026 and $85 billion in 2027. Looking further ahead, the institution projects that the WFE market could expand to $360 billion by 2030, equivalent to a 23% CAGR between 2026 and 2030.
In its commentary, the bank highlighted ongoing robust customer orders and capacity commitments tied to data centers and artificial intelligence deployments as supporting factors for the upgraded forecasts. The report also noted that memory pricing has been stable on a week-over-week basis for both DRAM and NAND products.
The report included a specific data point on GPU rental pricing, citing that rental rates for Nvidias B200 GPU stand at $5.72 per hour, which the bank describes as less than 10% below the March peak of about $6.10 per hour. Market data cited in the report showed Nvidia shares off 3.36% at the close in the referenced session, while premarket movement was slightly positive.
At the index level, the Philadelphia Semiconductor Index has posted a 67% gain year-to-date, the report said. The semiconductor group is trading at an 18 times next-twelve-months price-to-earnings ratio, which the bank notes is below the S&P 500s 19 times multiple.
Implications
- Memory and data-center equipment demand are central to the upgraded market and WFE forecasts.
- The report points to a pronounced acceleration in capital spending for fabrication, driven chiefly by DRAM equipment budgets in the near term.
- Valuation metrics show the semiconductor group trading slightly below the S&P 500 on an NTM P/E basis despite strong year-to-date gains.