Investing.com -- Bank of America told clients in a note on Tuesday that the risk/reward in semiconductors is positive despite near-term pressure, with the bank flagging eight names as enhanced buying opportunities.

Analyst Vivek Arya pointed to Nvidia (NASDAQ: NVDA), Marvell (NASDAQ: MRVL), Micron (NASDAQ: MU), Lam Research (NASDAQ: LRCX), AMD (NASDAQ: AMD), Intel (NASDAQ: INTC), Analog Devices (NASDAQ: ADI) and ON Semiconductor (NASDAQ: ON).

He said demand remains solid, but three headwinds could cap the group near term, with macro factors including rising rates, data-center backlash and geopolitics; circular financing at the micro level; and heavy positioning, with chips 13% overweight versus the S&P 500 per BofA's holdings report.

BofA sees roughly 10% further downside risk to the SOX index, which would return it to its pre-ChatGPT valuation discount to the broader market, though BofA called that unjustified on fundamentals.

"On the other side of the ledger, the setup is compelling," Arya wrote, citing bullish fourth- and first-quarter seasonality and a 20 times forward multiple against a 70% earnings CAGR through 2028.

On Nvidia, Arya stated that another beat-and-raise is expected but may not be enough, with the core worry being that its open-ended funding of customers and suppliers is diluting earnings quality.

The bank sees an opportunity for Nvidia to follow Apple's post-2012 playbook by lifting cash returns from around 50% of free cash flow to 75% or more.

BofA named Lam Research and Micron its favorite long-term "picks-and-shovels" investments.