Why Citi Is Bullish on AMD and Analog Devices Right Now

TLDR

• Citi added 30-day upside catalyst watches on AMD and Analog Devices ahead of Q1 earnings
• AMD’s server CPU market share rose to 41.3% in Q4 2025, up from 39% the prior quarter
• Analog Devices and Texas Instruments are raising analog chip prices 10–15% due to higher input costs
• Citi expects hyperscaler capital spending to grow 69% in 2026
• Citi projects the data center chip market will reach $731 billion by 2028

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Citi analysts are heading into the first-quarter semiconductor earnings season with a cautious overall view, but they have singled out two chip stocks for short-term upside potential: Advanced Micro Devices and Analog Devices.

The bank placed 30-day upside catalyst watches on both names ahead of their upcoming earnings reports.

Citi kept its Neutral rating on AMD but lowered its price target to $248 from $260. The firm shifted to a sum-of-the-parts valuation that breaks out AMD’s CPU and GPU businesses separately.

Advanced Micro Devices, Inc., AMD

Analysts raised their 2026 earnings per share estimate for AMD slightly to $6.38 from $6.34. They cited higher CPU sales tied to demand for agentic AI as the driver.

AMD has been gaining ground in the server CPU market. Its revenue share hit 41.3% in the fourth quarter of 2025, up from 39% the prior quarter. Intel’s share has dropped to 58.7%, down from 89.2% in early 2021.

Both Intel and AMD told customers they plan to raise CPU prices, with increases starting in March and April.

AMD’s Near-Term Outlook

While AMD expects the second half of 2026 to be below seasonal norms, the company says its client business can still grow. It is focused on share gains and the premium segment of the market.

Citi sees upside to Wall Street estimates for AMD heading into earnings, driven by that CPU pricing power and continued server share gains.

For Analog Devices, Citi holds a Buy rating with a $400 price target. The catalyst watch there is tied to price increases in the analog chip market.

Supply chain conversations at a recent industry conference showed both Analog Devices and Texas Instruments raising analog prices by 10% to 15%, citing higher input costs. Citi’s estimates for Analog Devices already sit above the Street consensus for the April and July quarters.

Data Center Demand Stays Strong

The data center segment makes up 34% of total semiconductor demand and remains the strongest part of the market. Citi models capital spending by the five largest U.S. cloud providers growing 69% in 2026, following a 79% increase in 2025.

The firm projects the total data center semiconductor addressable market will reach $731 billion by 2028.

Citi also said it is more constructive on CPU demand broadly, as the industry shifts toward inference and agentic AI workloads that require more CPU processing power.

On the weaker side, Citi expects smartphone unit volumes to fall 17% year over year as higher memory prices weigh on demand. However, it sees Apple suppliers Skyworks and Qualcomm as better insulated than others in that space.

Global PMI data from February showed continued strength in computing and communications equipment, which Citi said points to ongoing AI infrastructure investment supporting manufacturing activity.

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