A Wall Street firm sees a "bumpy yet rewarding ride" for semiconductor stocks in 2022 and named Nvidia stock its top pick.

BofA Securities analyst Vivek Arya remains bullish on semiconductor stocks, despite their recent downturn. He called semiconductors "the new 'oil' of the rapidly digitizing global economy."

As such, semiconductors are playing a critical role in a host of hot areas, he says. They include cloud computing, artificial intelligence, 5G wireless, advanced driver-assistance systems, autonomous vehicles and the metaverse.

However, macroeconomic factors such as inflation, rising interest rates, geopolitics and Covid lockdowns could make chip stocks volatile in the year ahead, Arya said in a note to clients Monday.

Semiconductor Stocks: Nvidia Stock Top Pick

"Despite the bumpiness, we see a worthwhile 2022 setup," Arya said.

Nvidia stock is his top pick among semiconductor stocks. The graphics-chip maker has the most upside to analyst estimates, Arya noted. Nvidia is seeing secular growth in gaming, AI, metaverse and automotive.

He rates Nvidia stock as buy with a price target of 375. On the stock market today, Nvidia stock rose 0.6% to 274.

Arya also cited as favorite chip stocks KLA, Micron Technology, ON Semiconductor and GlobalFoundries.

Taiwan Semi Closes Year With Solid Growth

Elsewhere among semiconductor stocks on Monday, Taiwan Semiconductor Manufacturing reported better-than-expected sales for the month of December. TSM shares climbed 1.2% to 125.01 on Monday.

In December, Taiwan Semi's sales rose 32% year over year in local currency, topping estimates.

For the fourth quarter, Taiwan Semi generated the equivalent of $15.76 billion in revenue. Analysts were expecting $15.64 billion, according to FactSet. Taiwan Semi reports results in new Taiwan dollars.

The chip foundry will post its fourth-quarter earnings on Thursday.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.