‘Almost time to buy again:’ Citi pounds table on chip stocks after sell-off

It’s almost time to buy again.

That’s the mantra that Citi is taking on semiconductor stocks after a sell-off in the sector following earnings season, the research firm said in a note on Tuesday.

“Consensus estimates declined 11% during earnings and the SOX index sold off 9% driven mostly by downside from [Microchip (MCHP), NXP Semiconductors (NXPI), and Intel (INTC)],” analyst Christopher Danely wrote in a note to clients. “However, we believe the downside/sell-off is almost over and attention will shift to 2025. We estimate global semi sales to be up another 9% YoY in 2025, following 17% YoY growth in 2024.”

Delving a bit deeper, Danley said that the downside in the industrial end market should “dissipate soon” and the correction in the automotive market should end in the first-half of 2025. Conversely, the other 75% of demand for the chip market is “solid” and investors should build positions in semiconductor stocks and “get aggressive” going into the first quarter of 2025, due in part to artificial intelligence-related spending from the big hyperscalers.

Danely has Buy ratings on AMD (NASDAQ:AMD), Analog Devices (ADI), Broadcom (NASDAQ:AVGO), Micron (MU), Microchip, Texas Instruments (NASDAQ:TXN), Nvidia (NASDAQ:NVDA) and KLA Corp. (KLAC).