Citibank believes that artificial intelligence (AI) continues to lead the development trend of the semiconductor industry, while Texas Instruments (TXN)avethxw53raptorThe positive performance of companies such as.US) in the analog space bodes well for the recovery of this market segment.
As the demand for AI chips from government agencies, academic institutions, and large and small enterprises continues to increase, the market potential of AI chips is expanding rapidly. AMD(AMD.US) has raised its AI-related sales forecast this year from $3.5 billion to $4 billion. Citi analyst Christopher Danely predicts that growth momentum in the AI sector will be stronger after AVGO.US's June earnings report.
In the field of simulation, Danieli is optimistic about the prospects of Microchip Technology (MCHP.US) and ADI> Adnor (ADI.US).avethxw53raptorHe pointed out that Microchip Technology's order cancellations have stopped and bookings have rebounded, so he expects Texas Instruments 'revenue guidance to increase 4% from the previous quarter.
Danieli said in an investor note that the analog industry is expected to see inventory replenishment in the second half of 2024, and Texas Instruments 'performance guidance for the second quarter of 2024 is expected to be raised.
Elsewhere in the semiconductor industry, Intel's (INTC.US) personal computer business has been hit by execution issues, and AMD faces a seasonal decline. Danelli mentioned that the traditional data center market is currently affected by inventory adjustments and the loss of AI market share.
Still, the market for wireless devices and technology is promising, but the AI-driven upgrade cycle may take another year. Qualcomm (QCOM.US)'s results exceeded expectations, partly due to inventory replenishment in the mobile phone market.
Daniely believes that although the automotive and industrial markets are still weak, the most difficult period seems to be over. He expects total chip sales for the year to increase 11% year-on-year to US$582.4 billion.
In his report, Denily emphasized that Citibank remains highly optimistic about the semiconductor industry and reiterated its preferred investment targets: in the AI field, including Micron Technology (MU.US), NVDA (NVDA), AMD, Broadcom and Maivel Technology (MRVL.US); in the analog field, including Microchip Technology and Adno; and in the equipment field, including Fanforest Group (LRCX.US) and Applied Materials (AMAT.US).