- Top Pick: Citi has identified Advanced Micro Devices (AMD) as the new leading chip stock, citing strong investor support and the most robust earnings growth outlook in the sector.
- Sentiment Shift: Investor sentiment is evolving, with former favorite Nvidia (NVDA) no longer the top pick, despite its continued dominance in the AI space.
- Industry Outlook: While AMD’s star is rising, Broadcom (AVGO) remains a widely held stock, and sentiment around Intel (INTC) is slowly starting to improve.
- Analyst Confidence: AMD’s recent Analyst Day was a major catalyst, boosting investor confidence with the announcement of ambitious long-term growth targets.
In a significant shift within the semiconductor industry, analysts at Citi have named Advanced Micro Devices (AMD) as the new frontrunner, surpassing rivals like Nvidia, Broadcom, and Intel in investor preference. The firm highlighted AMD’s strengthening investor support and what it sees as the most promising earnings growth trajectory among major chip manufacturers.
Why AMD is Now Citi’s Top Pick
According to Citi analyst Christopher Danely, AMD generated the strongest buying interest from investors following its recent Analyst Day. During the event, the company outlined a bold strategy to capture a leading position in the burgeoning $1 trillion compute market.
AMD’s ambitious long-term financial targets were a key factor in building this newfound confidence. The company is aiming for a compound annual growth rate (CAGR) in revenue of over 35% and an adjusted earnings per share (EPS) of more than $20. Citi believes that AMD’s strong forward outlook and strategic positioning in high-growth areas like AI servers and data center CPUs give it a distinct advantage in the current market cycle.
How Other Chip Giants Are Stacking Up
While AMD takes the top spot in Citi’s analysis, the sentiment across the rest of the sector is more varied.
Nvidia: Still a Leader, But Not the Favorite
Nvidia, long considered the undisputed champion of the AI rally, is still recognized as a major force. However, it is no longer the most favored stock among investors, according to Citi’s feedback. The primary concern revolves around whether Nvidia’s explosive earnings growth can be sustained at the same pace as in previous quarters.
Broadcom and Intel: A Mixed Bag
Broadcom remains a popular and widely owned stock, but some investors are seeking more clarity on its potential benefits from selling Tensor Processing Unit (TPU) chips for AI applications. Meanwhile, sentiment toward Intel is gradually becoming more positive, driven by a belief that its server chip business is stabilizing. Despite this, Danely expressed caution, noting he doesn’t see Intel’s foundry business achieving profitability in the near term.
Wall Street’s Take
Despite Citi’s preference for AMD, a broader view of Wall Street ratings shows a slightly different picture. Among the four chip giants, Nvidia still holds a “Strong Buy” rating and offers the highest potential upside, according to consensus estimates. Broadcom also carries a “Strong Buy” rating.
AMD is rated as a “Moderate Buy,” while Intel holds a “Hold” rating with minimal expected upside. This highlights the dynamic and often-debated landscape of the competitive semiconductor market.
Image Referance: https://www.tipranks.com/news/amd-nvda-avgo-intc-citi-picks-a-surprising-leader-among-top-chip-stocks