Bernstein analysts expect the wafer fab equipment market to remain “flat-ish” next year after an estimated 10% growth on the back of continued demand from China in 2024.
Still, the investment firm likes two European semiconductor stocks: BE Semiconductor Industries NV and Infineon Technologies AG for the coming year.
Here’s why Bernstein is bullish on the aforementioned European stocks and what each of these has in store for investors in 2025.
BE Semiconductor Industries NV (AMS: BESI)
BE Semiconductor or “Besi” as it’s broadly known is a semiconductor assembly equipment company based out of the Netherlands.
Bernstein analysts see an opportunity in the share of this Dutch firm as they’re currently trading at a discount. BESI is down more than 25% versus its year-to-date high at writing.
The investment firm dubbed BE Semiconductor a “top pick” for 2025 in its research note, saying the company continues to be a “very attractive fundamental story”.
Bernstein agreed that investors will need to be patient with BESI but remained confident that “both [cyclical recovery and hybrid bonding] will contribute to growth” moving forward.
In October, BE Semiconductor reported a 27% year-on-year increase in its quarterly revenue on the back of solid demand from computing end-user markets.
The Dutch firm improved its net income by more than 33% as well due to more controlled operating expenses.
BE Semiconductor stock currently pays a dividend yield of 1.61% which makes up for another great reason to own it for the long term.
That’s why Wall Street agrees with Bernstein’s outlook. The consensus rating on BESI currently sits at “overweight”.
Infineon Technologies AG (ETR: IFX)
IFX has been a big disappointment for its shareholders over the past six months but Bernstein analysts expect that to change in 2025.
Infineon is Europe’s largest chipmaker that supplies a range of semiconductor technologies to Apple Inc. According to Bernstein:
Indicators are now pointing to nearing the trough of the cycle, thus increasing the likelihood of a strong re-rating for IFX. That, combined with secular growth drivers, makes them our top pick among IDMs.
Bernstein is bullish on Infineon stock even though its revenue was down about 8.0% on a year-over-year basis in its fiscal 2024.
That’s because IFX plays a significant role in powering the AI data centres. That makes it a notable play on the artificial intelligence market that Statista forecasts will grow at a rapid pace and be worth $1.0 trillion within the next 10 years.
Infineon Technologies expects its AI revenue to top $500 million in fiscal 2025 and roughly double from there over the next two years.
Much like BE Semiconductor, IFX shares also currently pay a dividend yield of 1.10% which makes them more attractive for income investors.
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