Following the release of earnings reports from semiconductor companies, Citi has published a research report highlighting Broadcom (AVGO.US), NVIDIA (NVDA.US), Texas Instruments (TXN.US), and Monolithic Power Systems (MPWR.US) as its top picks among covered semiconductor stocks. In a report issued on Monday, Citi analysts noted that demand in the data center end-market, which accounts for 34% of semiconductor sales, remains robust, driven by artificial intelligence. The firm identified Broadcom and NVIDIA as core holdings for AI exposure.
The report indicated that the industrial end-market, representing 10% of sales, is performing slightly above seasonal trends, while the automotive end-market, accounting for 11% of sales, is generally in line with seasonal patterns. Analysts believe the analog chip segment is in the second phase of its cycle, during which companies with self-reliant capabilities, such as Texas Instruments, and those driven by product cycles, like Monolithic Power, are expected to outperform the broader sector.
Citi assigned a "Buy" rating to all four stocks, with price targets set at $475 for Broadcom, $270 for NVIDIA, $235 for Texas Instruments, and $1,350 for Monolithic Power Systems.
In contrast, semiconductor stocks with higher exposure to the PC, mobile, and consumer end-markets, such as Qualcomm (QCOM.US) and Intel (INTC.US), faced downward revisions to consensus estimates following their earnings reports. Citi pointed out that the PC, mobile, and consumer end-markets, which represent 42% of sales, are softening due to declining shipments caused by rising memory costs.
Data shows that for the average earnings per share expectations from fiscal 2025 to 2027, AI-related stocks saw an upward revision of approximately 13%, analog/lagging-node chip stocks were raised by about 4%, while PC/mobile-related stocks were lowered by around 8%. Citi maintained a "Neutral" rating on both Qualcomm and Intel, with price targets of $140 and $48, respectively.
According to Citi's data, market expectations for Broadcom's fiscal 2027 EPS have been raised from $14.99 to $18.72. NVIDIA's estimate increased from $9.98 to $10.70, and Monolithic Power's rose from $24.54 to $25.76, while Texas Instruments' estimate remained largely flat, adjusting slightly from $8.22 to $8.20. In comparison, Qualcomm's estimate was reduced from $10.61 to $8.86, and Intel's was lowered from $1.06 to $0.95.
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