A Citigroup survey shows that with Broadcom acquiring more AI customers and added value from VMware, Broadcom is catching up to Nvidia as the largest holding for investors, while investor sentiment towards Nvidia has cooled off
The concept of AI remains hot, which stocks are favored? Citigroup conducted an investor survey last week to capture the potential trends of various AI based on investor sentiment.
The Citigroup survey results show:
Nvidia is still the most favored, but Broadcom's popularity is catching up, with NXP Semiconductors being the most sought after in the analog chip field, followed by Analog Devices; concerns are raised about Micron due to worries that the advantage of the MI300 chip is diminishing, and the view on AMD is the most negative.
Nvidia remains the most popular, with Broadcom close behind
With Broadcom having more AI customers (such as Open AI and ByteDance) and value-added from VMware, Broadcom is catching up with Nvidia to become the largest shareholder, while investor sentiment towards Nvidia has cooled slightly.
NXP Semiconductors is the most favored in the analog chip field, followed by Analog Devices
In the analog chip field, NXP Semiconductors remains the most favored stock, followed by Analog Devices, mainly due to inventory replenishment reasons.
However, Citigroup maintains a sell rating on NXP Semiconductors, as it estimates over 35% downside due to adjustments in the automotive industry.
Some buying into ON Semiconductor, most negative on AMD, concerns about Micron
Some hedge funds are also buying into ON Semiconductor, expecting better-than-expected benefits in the second quarter and upward revisions to future guidance. Citigroup, however, downgraded its rating from "buy" to "neutral," believing that the commercialization risk of ON Semiconductor's silicon carbide business (accounting for 12% of sales in 24 years) could affect its valuation multiples.
Investors are most negative on AMD, with concerns in the market that the advantage of MI300 is facing challenges from Nvidia, and a decline in orders may lead to revenue decline, but Citigroup holds the opposite view, expecting that MI300 orders will not be cut.
Citigroup has put Micron on the negative watchlist, as Samsung may partner with Nvidia in HBM in the third quarter of 24, expecting Micron's stock price to underperform in the next month.
Hedge funds hold Texas Instruments long-term, but mutual funds are not interested
The survey shows that some hedge funds are buying Texas Instruments, expecting revenue growth and reduced capital expenditures. Citigroup believes that Texas Instruments' revenue will grow, but is skeptical about reducing capital expenditures, expecting it to only reduce capital expenditures by the end of this year.
However, mutual funds seem uninterested in Texas Instruments until they see the bottoming out of gross margins. Citigroup believes that Texas Instruments may reduce long-term capital expenditures by the end of this year, increase transparency on depreciation, which can roughly indicate the bottom of the profit margin and may lead us to a positive view on the stock