As the semiconductor industry approaches the first-quarter earnings season, a fresh analysis report from Citi has injected new expectations into the market. Citi (C) analysts have announced the initiation of a 30-day “upside catalyst watch” on chip giant AMD (AMD) and analog chip leader Analog Devices (ADI), reflecting strong confidence in the near-term stock performance of these two companies.
Regarding the positive outlook on AMD, Citi emphasized the significant role of the emerging trend of “agentic AI” in driving demand for server CPUs. As AI applications evolve from basic inference to more complex autonomous agent tasks, the market’s need for high-performance processors is surging. Meanwhile, AMD continues to expand its share in the server market, with its revenue share rising from 39% in the third quarter of 2025 to 41.3% in the fourth quarter. Coupled with potential price hikes by both AMD and Intel—each planning to gradually increase CPU product line prices starting in March and April—Citi has slightly lowered its price target for AMD to $248 due to valuation methodology adjustments, while simultaneously raising its 2026 earnings per share forecast.
In the analog chip sector, Analog Devices is seen as a leader in the industry’s recovery. Citi has set a price target of $400 and maintains a “buy” rating, primarily driven by a wave of cost-led price increases in the analog chip market. February’s global PMI data showed “continued resilience,” particularly in the computer and communication equipment sectors, where AI infrastructure construction is boosting manufacturing activity. According to industry research, major players like Analog Devices and Texas Instruments are expected to raise product prices by 10% to 15%. In Citi’s view, ADI not only benefits from improving pricing dynamics but also stands out as a top pick for investors in the analog semiconductor recovery cycle.
In the data center sector, Citi expects capital expenditures by hyperscale cloud service providers to grow by 69% this year, with the total addressable market reaching $731 billion by 2028. As the industry shifts toward inference and agentic AI—areas that require more CPU resources—Citi has adopted a more positive stance on CPU demand. Regarding the overall consumer electronics supply chain, despite forecasting a potential 17% decline in global smartphone shipments this year due to cost premiums, Apple suppliers such as Skyworks Solutions and Qualcomm are seen as more defensive. Their exposure to high-end market demand makes them less vulnerable to macroeconomic fluctuations, positioning them to potentially exceed market expectations during the earnings reporting period.
