Semiconductor sector experiencing a two-sided situation: Citigroup supports the four giants of AI and analog chips while lowering expectations for PC and mobile phone chips.

After several semiconductor companies released their financial reports, Citibank released a research report on Broadcom Inc. (AVGO.US), NVIDIA Corporation (NVDA.US), Texas Instruments Incorporated (TXN.US), and Monolithic Power Systems (MPWR.US), which stood out among the semiconductor stocks covered by the institution, becoming their "preferred targets". Citibank analysts pointed out in a research report on Monday that the demand for data center terminal markets (which accounts for 34% of semiconductor sales) remains strong due to the drive of artificial intelligence, and they believe that Broadcom Inc. and NVIDIA Corporation are the "core holdings in artificial intelligence". The report showed that the performance of the industrial terminal market (which accounts for 10% of sales) was slightly above seasonal levels, while the automotive terminal market (which accounts for 11% of sales) generally followed seasonal trends. Analysts believe that the analog chip sector is currently in the second stage of its cycle framework. In this stage, stocks with "self-sufficiency" capabilities (such as Texas Instruments Incorporated) and those being driven by "product cycles" (such as Monolithic Power) usually outperform the sector. Citibank has given a "buy" rating to the four aforementioned stocks, setting target prices of $475 for Broadcom Inc., $270 for NVIDIA Corporation, $235 for Texas Instruments Incorporated, and $1,350 for Monolithic Power. In contrast, semiconductor stocks associated with the PC, mobile, and consumer terminal markets, such as Qualcomm (QCOM) and Intel Corporation (INTC), experienced a market-wide downward adjustment after the financial reports were released. Citibank pointed out that the PC, mobile, and consumer terminal markets (which account for 42% of sales) are softening due to a decrease in shipments caused by rising memory costs. Data shows that in terms of average expected earnings per share for the fiscal years 2025 to 2027, stocks related to AI concepts have been raised by about 13%, analog/delayed node chip stocks have been raised by 4%, while PC/mobile-related stocks have been lowered by about 8%. Citibank maintains a "neutral" rating for Qualcomm and Intel Corporation, with target prices of $140 and $48, respectively. According to Citibank's data, the market's earnings per share expectations for the fiscal year 2027 for Broadcom Inc. have been raised from $14.99 to $18.72. NVIDIA Corporation's expectations have been raised from $9.98 to $10.70, Monolithic Power's from $24.54 to $25.76, while Texas Instruments Incorporated's expectations remained relatively stable, with a slight adjustment from $8.22 to $8.20. In contrast, Qualcomm's expectations have been lowered from $10.61 to $8.86, and Intel Corporation's expectations have been lowered from $1.06 to $0.95.