Citi's Bombshell: AMD Overtakes Nvidia as Top Pick
- In a surprising shift, Citi has named Advanced Micro Devices (AMD) as the new leading stock in the semiconductor space, overtaking previous favorite Nvidia.
- The endorsement follows AMD's recent Analyst Day, where the company outlined a robust strategy for growth, fueling strong investor confidence.
- While Nvidia remains a dominant AI leader, concerns are emerging about its future earnings growth compared to its past performance.
- Despite Citi's preference for AMD, broader Wall Street consensus still indicates Nvidia holds the highest potential upside among top chip stocks.
A New King in the Chip Sector?
In a significant market update, Citi has identified a new frontrunner in the highly competitive semiconductor industry. Analyst Christopher Danely has declared Advanced Micro Devices (AMD) as the firm's top pick, citing growing investor support and the most promising earnings growth outlook among its peers. This move signals a potential shift in sentiment away from Nvidia, which has long dominated the AI chip conversation.
Why AMD is Gaining Momentum
According to Danely, the enthusiastic response from investors was largely driven by AMD's recent Analyst Day. The company presented a bold vision for the future, aiming to capture a significant share of what it projects to be a $1 trillion compute market. AMD backed this ambition with aggressive long-term financial targets, including a compound annual growth rate (CAGR) for revenue exceeding 35% and an adjusted EPS of over $20.
Citi believes AMD is strategically positioned for success in key growth areas, particularly in AI servers and data center CPUs. Coupled with a strong pipeline of new product launches, the firm sees AMD having a distinct advantage in the current market cycle.
How Other Chip Giants Compare
While AMD takes the spotlight, sentiment across the rest of the chip sector remains mixed.
Nvidia's Shifting Position
Nvidia is still universally recognized as a powerhouse in AI. However, based on recent investor feedback cited by Citi, it is no longer the clear favorite. The primary concern revolves around whether Nvidia can sustain its explosive earnings growth, which has set an incredibly high bar in previous quarters.
Broadcom and Intel's Outlook
Broadcom (AVGO) remains a widely held stock, but investors are seeking more clarity on its potential benefits from selling Tensor Processing Unit (TPU) chips for AI applications. Meanwhile, Intel (INTC) is experiencing a slow but steady improvement in investor sentiment, particularly regarding its server chip business. However, Danely expressed skepticism about the near-term profitability of its foundry operations.
Wall Street's Broader View
It's important to note that Citi's call reflects a specific viewpoint. When looking at the broader Wall Street consensus, the picture is slightly different. Among the four major chip stocks, Nvidia is still projected to have the highest upside potential at 34% and maintains a "Strong Buy" rating. AMD follows with a "Moderate Buy" rating and an estimated 22% upside. Broadcom also holds a "Strong Buy" rating with a 17% potential upside, while Intel lags with a "Hold" rating and just over 3% expected growth.
