Nvidia shares still garner the most positive reception, but Broadcom ‘is catching up’ in terms of sentiment, according to Citi.
Citi Research analyst Christopher Danely left a week of investor meetings still feeling “wildly bullish” about the semiconductor sector.
He also came away with some more micro-level insights on investor preferences within the chip sector these days. And one big takeaway: Broadcom Inc. shares are becoming ever more popular.
NVIDIA Corp Corp. shares still garner the most positive reception, but Broadcom “is catching up,” according to Danely. Part of that is related to the company’s business momentum, as the company has some potentially compelling artificial-intelligence partnerships on the horizon and is also seeing accretion benefits from its VMware acquisition.
Plus, “We also believe there is some investor fatigue with NVDA,” Danely wrote Monday.
Broadcom shares are up 44% so far this year, while Nvidia’s stock is ahead almost 150%.
One buzzy name that Danely sees as out of favor is Advanced Micro Devices. That and Microchip Technology Inc.
were the “most hated stocks” coming out of his conversations, with investors worried about potential order cuts for AMD’s MI300 AI accelerator product as well as the prospect of further revenue cuts at Microchip.
”We do not expect MI300 cuts but believe [Microchip] could guide slightly below consensus,” Danely wrote.
While he didn’t discuss Micron Technology investor sentiment directly, he did flag that he was opening a negative-catalyst watch on the stock. Danely worries that it could “trade poorly for a month” given his expectations that Samsung will qualify its high-bandwidth-memory offering with Nvidia and boost capital expenditures.
While Micron shares were the second-worst performer in the Philadelphia Semiconductor Index on Monday, they did eke out a gain as all members of the index finished in positive territory.
Danely also weighed in on shares of Texas Instruments, which reports earnings Tuesday afternoon.
“Mutual funds did not appear to be interested in [Texas Instruments] until they have visibility to bottoming of gross margins,” he wrote. “We believe [Texas Instruments] could lower long-term [capital expenditures] before the end of the year, give more transparency on depreciation, (which could enable investors to roughly gauge a margin bottom) and could cause us to become positive on the stock.”
Comments