As the US stock earnings season is about to enter its peak stage, Citigroup remains bullish on the semiconductor sector, citing strong equipment sales and sustained spending on artificial intelligence by companies. During the earnings season, the company's preferred symbols are those primarily related to artificial intelligence.$NVIDIA (NVDA.US)$,$Micron Technology (MU.US)$,$Advanced Micro Devices (AMD.US)$,$Broadcom (AVGO.US)$And.$Marvell Technology (MRVL.US)$Citigroup believes that even though the valuation is high, Qualcomm could continue to rise. Its analyst Danely pointed out that the global interest in the iPhone has increased, partly due to discount strategies and promotion of artificial intelligence, which will benefit Qualcomm. Danely raised Qualcomm's target price from $170 to $200 and also raised the performance expectations for the chip maker.$PHLX Semiconductor Index (.SOX.US)$Therefore, Danely raised the target prices for Qualcomm and On Semiconductor from $150 and $185 to $220 and $200 respectively, and also raised the expected returns.

Citigroup analyst Christopher Danely wrote in an investor report: "We expect inventory replenishment in the industrial end market, the advantages of AI, and the stabilization of PC, wireless and data center end markets (which represent 62% of half-finished product sales) and better data/guidance from analog chip companies to be positive catalysts for the semiconductor field in the Q2 2024 earnings season. Although valuations are high, we believe that (PHLX semiconductor index) can continue to rise, citing our first rule of semiconductor investment: 'Do not buy or sell based on valuations.'"

Danely raised AMD's target price from $176 to $210 and raised performance expectations. Danely added: "The AI market is growing steadily, and our survey shows that the potential market size is expanding. Government agencies, universities, and large and medium-sized enterprises are all purchasing AI chips. We expect AMD to raise its AI sales forecast in this month's report and note that Broadcom has recently raised its AI sales guidance."

In contrast, Danely downgraded the rating of ON Semiconductor based in Phoenix from "buy" to "neutral", citing weak demand in the silicon carbide market. However, most analysts are bullish on ON Semiconductor, with a general recommendation of "buy" on Wall Street.$Qualcomm (QCOM.US)$Danely raised Qualcomm's target price from $170 to $200 and also raised the performance expectations for the chip maker, as he believes that the global interest in the iPhone has increased, partly due to discount strategies and promotion of artificial intelligence, which will benefit Qualcomm.

Danely wrote: "Due to inventory replenishment and strong orders before Apple's release of the new iPhone in Q3, the wireless terminal market (which represents 17% of the potential semiconductor market) seems healthy."

In addition, Danely stated that a special area of concern in the chip field is analog chips, but even for analog chips, they appear to be rebounding. The analyst wrote: "We expect the analog industry to have inventory replenishment in the second half of the year, above the market's general expectations." The analyst also added that Texas Instruments(TXN.US) may provide the most positive performance results considering its portfolio and lower channel inventory.

Danely raised the target prices for Qualcomm and ON Semiconductor from $150 and $185 to $220 and $200 respectively, and also raised the expected returns.$NXP Semiconductors (NXPI.US)$And.$Texas Instruments (TXN.US)$Danely raised the target prices for Qualcomm and On Semiconductor from $150 and $185 to $220 and $200 respectively, and also raised the expected returns.

On the other hand, Danely downgraded the rating of ON Semiconductor based in Phoenix from "buy" to "neutral", citing weak demand in the silicon carbide market.$ON Semiconductor (ON.US)$However, most analysts are bullish on ON Semiconductor, with a general recommendation of "buy" on Wall Street.

Editor/ping