| | | Chips have more upside, so 'keep buying the dips,' Citi says
Aug. 19, 2025 8:49 AM ET
By: Chris Ciaccia, SA News Editor
There is likely more upside in semiconductor stocks to come, so any dips should be bought, investment firm Citi said.
“It was a tale of two earnings as the SOX sold off 5% during the first part of earnings, driven by disappointments across the board and estimates declining 6%,” analyst Christopher Danely wrote in a note to clients. “However, the index bounced back to the peak driven by AI strength and more data points that the analog recovery is still in its infancy. We expect the SOX index to continue to climb higher driven by strong earnings from AI-related companies such as Nvidia ( NVDA), Broadcom ( AVGO) and Micron ( MU) in addition to increasingly positive data points from the analog space.”
The firm's top pick is Microchip (NASDAQ: MCHP), but it also has Buy ratings on Texas Instruments ( TXN), Broadcom, Micron, Analog Devices ( ADI) and NXP Semiconductors ( NXPI).
Danely added that the Philadelphia Semiconductor Index is back to its peak after the selloff, due largely to Micron's positive pre-announcement, positive commentary from analog companies and artificial intelligence-related optimism from companies like Nvidia and Broadcom. And while consensus estimates declines 6% — due largely to Intel ( INTC) — AI is still a bright spot, with companies such as Meta ( META), Microsoft ( MSFT) and Google ( GOOG) showing an $18B increase in capex for 2025.
“We expect continued upside for AI-exposed stocks such as AVGO (31% of sales), MU (17% of sales) and NVDA (89% of sales). Analog upturn remains intact and still early — Analog companies guided 3Q25 sales up 6% QoQ on average, largely in line with seasonality,” Danely added. “While there appears to be some tariff-related pull-ins in the Auto and Industrial end markets (combined 23% of semi sales), we believe the analog upturn remains intact, driven by low inventory, depressed margins, and improving demand.” |
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