Bank of America analyst Vivek Arya believes that investments from major cloud service providers in order to meet rising demand for AI will lead to the surge in hyperscale investments in 2025.

Arya's picks for semiconductor and AI companies which he expects will best capitalize on this growth, include NVIDIA Corporation (NASDAQ:NVDA), Micron Technology, Inc. (NASDAQ:MU), Marvell Technology, Inc. (NASDAQ:MRVL) and Arm Holdings Plc (NASDAQ:ARM).

The analyst specifically refers to cloud service providers including Google parent Alphabet Inc. (NASDAQ:GOOGL), Meta Platforms, Inc. (NASDAQ:META), Amazon.Com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT).

Arya believes that the hyperscale investments will involve both defensive and offensive spending. Defensive spending is focused on maintaining competitiveness in the market and typically includes projects related to infrastructure, security, and reliability improvements. In contrast, offensive spending aims at company growth and usually involves expanding data center capacity or enhancing artificial intelligence capabilities.

Price Action: At the time of writing, NVDIA shares are trading 1.03% higher at $141.86, Micron stock is moving 1.15% higher at $108.08, Marvell shares are flat at $81.90 and Arm stock is trading 2.13% higher at $144.05 according to data from Benzinga Pro.

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