NVIDIA (NASDAQ:NVDA) continues to enjoy the most positive sentiment among semiconductor stocks, but Broadcom (NASDAQ:AVGO) is quickly gaining ground, according to Citi analysts.
"While NVDA remains the stock with the most positive sentiment, we believe AVGO is catching up," Citi said in a note after a week of investor meetings in New York and Connecticut.
The bank said investors are increasingly bullish on AVGO due to its expanding AI customer base, including prominent names like OpenAI and ByteDance, as well as the accretion from VMware.
Additionally, analysts state there is some investor fatigue with NVDA, contributing to AVGO's rising popularity.
Within the analog semiconductor sector, Citi says NXP Semiconductors (NASDAQ:NXPI) and Analog Devices (NASDAQ:ADI) are favored due to inventory replenishment.
"NXPI is still the most favored stock, followed by ADI," Citi reported, though they remain sell-rated on NXPI due to potential downside risks from auto market corrections.
The bank adds that Texas Instruments (NASDAQ:TXN) has also caught the attention of hedge funds, who are buying into the stock with expectations of revenue upside and lower capital expenditures.
However, analysts explain that mutual funds are holding back until they see a clear bottoming of gross margins. Citi believes that TXN might lower its long-term capex by the end of the year, which could provide more transparency and potentially make the stock more attractive.
On the other hand, AMD (NASDAQ:AMD) and Microchip Technology (NASDAQ:MCHP) are currently considered the least favored among investors, according to Citi.
Fears of cuts to AMD's MI300 and further revenue reductions for MCHP are driving this negative sentiment. "We do not expect MI300 cuts but believe MCHP could guide slightly below Consensus," Citi stated.
Citi also initiated a negative catalyst watch on Micron Technology (NASDAQ:MU), predicting poor stock performance over the next month due to anticipated developments at Samsung. "We expect Samsung to qualify HBM with NVDA in 3Q24 and raise capex," Citi explained.
Despite these varied sentiments, Citi remains "wildly bullish" on the semiconductor sector as a whole.