Semiconductor companies are facing improved prospects headed into 2021, but these tailwinds could be tempered by stock prices that are near all-time highs, analysts said on Monday.

The Philadelphia Semiconductor index rose 1% on Monday, bringing its year-to-date advance to nearly 50%. The industry benchmark has easily outperformed the nearly 14% gain of the S&P 500, as well as the 37% rise of the S&P 500 information technology index.

This rally “sets high expectations for sales and EPS momentum through 2021,” wrote Bloomberg Intelligence. However, “barring severe Covid-19 impediments, chipmakers can perform to this expectation or even above it.”

Analysts were broadly positive on the group’s fundamentals, even as they differed on the upside potential of the stocks.

“Bears will say good news is priced in and a retreat’s overdue,” wrote B Riley FBR analyst Craig Ellis. “Yet an upcycle comparison to the post-Great Recession recovery argues for +19% SOX upside.” The firm sees additional upside and “relative valuation gains as broadening and accelerating fundamental strength lifts EPS materially through the year.”

Morgan Stanley took a more cautious stance. The firm sees strong semiconductor fundamentals in 2021, including a “broad based demand recovery,” but noted that this was “matched by peak multiples.” Analyst Joseph Moore cautioned that P/E multiples had expanded to “extreme levels,” which “puts the focus on earnings recovery, not further expansion, as the key stock driver.”

The firm has an in-line rating on the sector, and wrote that investors should be discerning with stock selection.

This view was echoed by Stacy Rasgon, an analyst at Bernstein. “We are emerging out of COVID more constructive on the long-term prospects for semis given the increasing importance of the sector, both functionally and strategically,” he wrote. At the same time, he added, “we are cognizant of nearer-term risks, and prefer to be selective.”

Rasgon wrote that when it comes to recent strength, “questions of sustainability remain” as some of the tailwinds have been driven by remote work, a factor that will face “tough compares and [an] uncertain trajectory in a recovery scenario.” There are also signs that investors are highly crowded within the space, he wrote.

The firm listed Broadcom, Qualcomm and Nvidia among its top picks for 2021.