These 2 Chip Stocks Are Piper Sandler’s Top Picks Into 2027

Investing.com -- Piper Sandler maintains a positive outlook on AI supply chain fundamentals despite ongoing market uncertainty, identifying two top picks in the chip sector heading into 2027. The broker expects compute companies to report slightly better results than consensus estimates, with demand visibility extending beyond two years and supply constraints persisting through 2028.

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All fundamental data points across the AI supply chain remain positive, according to Piper Sandler. The firm anticipates companies will deliver consistent messaging around three key themes: demand remains very strong with visibility extending two-plus years, the industry faces severe supply constraints through 2028, and pricing continues to increase.

While companies have already provided some outlook guidance for 2027, analysts expect them to reiterate these projections during upcoming earnings reports.

ARM Holdings

ARM ranks as one of Piper Sandler's two top chip stock picks. Investors appear to be positioning long on ARM to capitalize on the Agentic AI tailwind, though concerns remain about finding upside given supply constraints, the broker said.

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The key focus centers on whether ARM can secure additional supply for its Silicon AGI business in 2027-28. Piper Sandler views the Softbank Accelerator opportunity as the main catalyst for ARM, though timing remains unclear on when additional details will emerge.

Broadcom

Broadcom represents Piper Sandler's second top pick, though the stock faces heated debate heading into earnings results. Investor concerns focus on gross margin trajectory into 2027, driven by rising HBM memory costs.

While peer Nvidia has disclosed a trough level for next year, Broadcom has not yet provided similar guidance. This remains the primary overhang on the stock, with the share loss story related to MediaTek already absorbed by the market.

Piper Sandler believes management providing a framework on gross margins for 2027 would eliminate the bear case and allow the stock to perform. The broker expects slightly better results and guidance versus consensus, but only a reiteration of the fiscal year 2027 outlook, implying revenues up 60% year-over-year to $170 billion.

Original Article

These 2 Chip Stocks Are Piper Sandler's Top Picks Into 2027

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