Bernstein's top semi-picks for 2023 are AMD, Qualcomm, Nvidia, and Broadcom.

Investment company Bernstein's top picks in the semiconductor market for 2023 are Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA), Qualcomm (NASDAQ:QCOM), and Broadcom (NASDAQ:AVGO), since the first three have had their expectations "markedly" reduced and Broadcom (AVGO) still has a record backlog.

The year 2022 was terrible for semiconductor equities, and 2023 is likely to witness a downturn for the industry, but there are disagreements over how far it will go and how long it will stay, according to analyst Stacy Rasgon, who has an outperform recommendation on all four companies.

Rasgon stated in a note to clients that in the current market conditions, "we would be looking for names that have cut, and where there is a strong secular story that can play off that bottom (AMD, QCOM, and NVDA come to mind, as well as, potentially, semicap), and would continue to pitch AVGO for the cyclically nervous."

Although AMD (AMD), Qualcomm (QCOM), and Nvidia (NVDA) have already lowered their forecasts, Rasgon said that all three firms have "strong stories going ahead," even though AMD (AMD) has some customer risk despite displacing Intel in the market share race (INTC).

The gaming market has probably reached a bottom for Nvidia (NVDA), which will benefit from a number of product cycles in the coming year, including those for datacenters and gaming. In addition to "burgeoning adjacency story mixed with very affordable valuation," Qualcomm (QCOM) is anticipated to face easier comparisons and might see share gains from Samsung (OTCPK:SSNLF) and a "stickier" scenario with Apple's (AAPL) modems.

Rasgon stated that given its visibility, the fact that its software business is steadily lowering its volatility (along with the possibility for VMware (VMW) to lessen it), and a good cash generation and return profile, Broadcom (AVGO) might benefit "cyclically concerned" investors.

Rasgon also has a positive outlook on the semiconductor companies Applied Materials (AMAT), Lam Research (LRCX), and Analog Devices (ADI).

As the company's top semiconductor stock for 2023, AMD (AMD) has supplanted Lam Research (LRCX), according to Morgan Stanley analyst Joseph Moore on Thursday.