Nomura Instinet analyst David Wong rolled out coverage on four names in the U.S. Semiconductors. The analyst has a positive view on long-term semiconductor growth, but cyclical concerns make him cautious in the near term. He models long-term semiconductor annual sales growth of 7%-9% from 2020 to 2025, driven by new technologies, including artificial intelligence, autonomous driving, 5G communications, Internet of Things, and the continued buildout of global data center infrastructure. However, the cyclical downturn, which began in the second half of 2018, could "present headwinds" for chip companies through 2019 and possibly in 2020, Wong tells investors in a research note. He foresees continuing year-over-year declines for the chip industry through 2019, with 2019 down about 10%.

Nonetheless, the analyst initiated coverage of AMD (AMD) and Intel (INTC) with Buy ratings and price targets of $33 and $65, respectively. AMD's "solid positions" in both the x86 microprocessor and standalone graphics processor markets "make it stand out," says Wong. He believes the company has an opportunity to gain share with the launch of its new microprocessor and GPU families, driving sales growth through 2019, 2020, and beyond. Further, Wong thinks Intel's "dominance" in microprocessors, and in particular, its leadership in artificial intelligence and autonomous driving, will drive above-average long-term growth for the company. 

The analyst also initiated Nvidia (NVDA) and Xilinx (XLNX) with Neutral ratings. He thinks both stocks' valuations already reflect the companies' positives.