The context of that move is a wild stretch of volatility. The SOX rallied roughly 100% in the first half of 2026, including its strongest single quarter ever with an 88% gain in Q2 . An 11% Q3 decline and an 8% single-week drop in late June then triggered the selloff . BofA argues this pattern — a massive AI-driven rally followed by a sharp pullback — aligns with historical seasonal trends where chip stocks "pull back in summer and rebound in fall" . The bank notes the sector trades at a "c3x discount to average '28 CSS multiples" and that semicaps specifically show a 6-7x valuation discount .

The $250 Billion WFE Forecast

The backbone of BofA's bull case is a forecast that global wafer fab equipment (WFE) spending will reach at least $250 billion in 2028, implying two consecutive years of roughly 30% year-over-year growth . BofA previously estimated $203 billion for 2028 and has since lifted the forecast, with a scenario of $292 billion possible by 2030 .

That $250 billion figure does not belong to BofA alone. Several other major firms have aligned with or exceeded it:

• UBS and Susquehanna also project $250 billion in WFE by 2028, with Susquehanna raising its view to $300 billion .
• Citi's bull case phases WFE at approximately $145 billion in 2026, $200 billion in 2027, and $250 billion in 2028 .
• Morgan Stanley lifted its 2027-2028 WFE forecasts but stated it is "not yet baking a $250 billion view into its models," suggesting the number is at the upper end of consensus .
• The industry association SEMI has a more conservative forecast of $229.5 billion for total semiconductor equipment (not just WFE) in 2028 .

Buy-Rated Stocks

BofA's note named four primary Buy-rated stocks spanning equipment, manufacturing, and networking :

1. ASML Holding (ASML) — BofA's preferred European large-cap expression of the AI capex theme. The bank cites higher average selling prices and expanding gross margins as structural supports . ASML has been a long-standing top pick for the bank, also named to its "Europe 1" list .
2. ASM International (ASMI) — Listed alongside ASML as a Buy for European semiconductor equipment exposure .
3. STMicroelectronics (STM) — Included as a Buy-rated semicap name. BofA acknowledged market frustration with STM's gradual margin leverage but estimates earnings power above $4.50 per share in CY28 .
4. Nokia (NOK) — Rated Buy, reflecting the bank's view that AI infrastructure demand extends beyond pure-play chipmakers into networking and telecom hardware .

The note also separately highlighted that lower-beta stocks like Nvidia, Texas Instruments, Analog Devices, Cadence, and Synopsys are expected to lead in the near term .

The Anchor Deal: Samsung and Broadcom

To ground its $250 billion WFE forecast in real-world evidence, BofA cites the Samsung-Broadcom partnership announced July 25, 2026. Samsung signed a five-year memorandum of understanding (MOU) with Broadcom valued at over $200 billion through 2030, covering memory chips, contract chipmaking (foundry), and advanced packaging .

Key details:

• Broadcom's next-generation communications and AI chips will be manufactured on Samsung's 2-nanometer and below process technologies .
• The deal includes supply of HBM4 and next-generation HBM4E memory for Broadcom's AI accelerators .
• It extends through 2030 and is one of the largest single long-term supply agreements in the semiconductor industry, representing a direct challenge to TSMC's foundry dominance .

BofA cites this agreement — along with higher capex announcements from TSMC and Intel — as evidence that the $250 billion WFE forecast is grounded in real contractual commitments, not speculation . On July 25, 2026, the same day the Samsung-Broadcom deal was announced, BofA released its note calling the selloff an enhanced buying opportunity.

The Bottom Line

Bank of America's thesis rests on three interconnected claims: the 18% SOX underperformance vs. the S&P 500 has created a valuation reset; the $250 billion WFE target is supported by large-scale customer commitments like the Samsung-Broadcom deal; and the recommended stocks span the full capex chain. The bank sees the selloff as a temporary correction within a multiyear AI infrastructure super-cycle, not a cyclical downturn. Investors evaluating the thesis should weigh the potential upside against the fact that some Wall Street firms (Morgan Stanley) and the industry association (SEMI) have not yet endorsed the highest WFE estimates.

The context of that move is a wild stretch of volatility. The SOX rallied roughly 100% in the first half of 2026, including its strongest single quarter ever with an 88% gain in Q2 . An 11% Q3 decline and an 8% single-week drop in late June then triggered the selloff . BofA argues this pattern — a massive AI-driven rally followed by a sharp pullback — aligns with historical seasonal trends where chip stocks "pull back in summer and rebound in fall" . The bank notes the sector trades at a "c3x discount to average '28 CSS multiples" and that semicaps specifically show a 6-7x valuation discount .

The $250 Billion WFE Forecast

The backbone of BofA's bull case is a forecast that global wafer fab equipment (WFE) spending will reach at least $250 billion in 2028, implying two consecutive years of roughly 30% year-over-year growth . BofA previously estimated $203 billion for 2028 and has since lifted the forecast, with a scenario of $292 billion possible by 2030 .

That $250 billion figure does not belong to BofA alone. Several other major firms have aligned with or exceeded it:

• UBS and Susquehanna also project $250 billion in WFE by 2028, with Susquehanna raising its view to $300 billion .
• Citi's bull case phases WFE at approximately $145 billion in 2026, $200 billion in 2027, and $250 billion in 2028 .
• Morgan Stanley lifted its 2027-2028 WFE forecasts but stated it is "not yet baking a $250 billion view into its models," suggesting the number is at the upper end of consensus .
• The industry association SEMI has a more conservative forecast of $229.5 billion for total semiconductor equipment (not just WFE) in 2028 .

Buy-Rated Stocks

BofA's note named four primary Buy-rated stocks spanning equipment, manufacturing, and networking :

1. ASML Holding (ASML) — BofA's preferred European large-cap expression of the AI capex theme. The bank cites higher average selling prices and expanding gross margins as structural supports . ASML has been a long-standing top pick for the bank, also named to its "Europe 1" list .
2. ASM International (ASMI) — Listed alongside ASML as a Buy for European semiconductor equipment exposure .
3. STMicroelectronics (STM) — Included as a Buy-rated semicap name. BofA acknowledged market frustration with STM's gradual margin leverage but estimates earnings power above $4.50 per share in CY28 .
4. Nokia (NOK) — Rated Buy, reflecting the bank's view that AI infrastructure demand extends beyond pure-play chipmakers into networking and telecom hardware .

The note also separately highlighted that lower-beta stocks like Nvidia, Texas Instruments, Analog Devices, Cadence, and Synopsys are expected to lead in the near term .

The Anchor Deal: Samsung and Broadcom

To ground its $250 billion WFE forecast in real-world evidence, BofA cites the Samsung-Broadcom partnership announced July 25, 2026. Samsung signed a five-year memorandum of understanding (MOU) with Broadcom valued at over $200 billion through 2030, covering memory chips, contract chipmaking (foundry), and advanced packaging .

Key details:

• Broadcom's next-generation communications and AI chips will be manufactured on Samsung's 2-nanometer and below process technologies .
• The deal includes supply of HBM4 and next-generation HBM4E memory for Broadcom's AI accelerators .
• It extends through 2030 and is one of the largest single long-term supply agreements in the semiconductor industry, representing a direct challenge to TSMC's foundry dominance .

BofA cites this agreement — along with higher capex announcements from TSMC and Intel — as evidence that the $250 billion WFE forecast is grounded in real contractual commitments, not speculation . On July 25, 2026, the same day the Samsung-Broadcom deal was announced, BofA released its note calling the selloff an enhanced buying opportunity.

The Bottom Line

Bank of America's thesis rests on three interconnected claims: the 18% SOX underperformance vs. the S&P 500 has created a valuation reset; the $250 billion WFE target is supported by large-scale customer commitments like the Samsung-Broadcom deal; and the recommended stocks span the full capex chain. The bank sees the selloff as a temporary correction within a multiyear AI infrastructure super-cycle, not a cyclical downturn. Investors evaluating the thesis should weigh the potential upside against the fact that some Wall Street firms (Morgan Stanley) and the industry association (SEMI) have not yet endorsed the highest WFE estimates.