Susquehanna revised the price target on several semiconductor stocks while providing an earnings preview of the sector.
“As we preview semis earnings, we generally expect modest upside for 4Q results and the 1Q outlook. While we expect the bulk of the upside to once again come from AI, the semis upcycle appears to be steadily progressing as lead-times (LTs) expanded by five days in 4Q25 in our SemiSIGnals data. We therefore generally anticipate a better than seasonal outlook for 1Q across the group, albeit with some variation across companies and geographies,” said analysts led by Christopher Rolland.
For the PC market, the analysts said builds in the fourth quarter were better than their prior expectations, with much of the upside coming in December as original design manufacturers, or ODMs, appeared to build ahead of expected memory price increases. Looking ahead, memory shortages are expected to be a key headwind in 2026, the analysts noted.
For Handsets, the analysts said that the fourth quarter 2025 smartphone shipments (sell-through) were in line with their prior estimate and typical seasonality (up about 4% quarter-over-quarter). However, Apple (AAPL) shipments were better than expected (down about 8% quarter-over-quarter versus prior expectations of down nearly 15% quarter-over-quarter), a positive for Apple semi suppliers in Susquehanna’s coverage.
Rolland and his team said that for data centers, intra-quarter comments from Nvidia (NVDA) once again pointed to further AI upside, as the company confirmed its Blackwell/Rubin 2025/2026 backlog had now soared above their prior around $500B figure.
Outside of graphics processing units, or GPUs, Alphabet’s (GOOG) (GOOGL) unit, Google’s Tensor Processing Units, or TPUs, remain a source of strength for Broadcom (AVGO) and the remainder of the supply chain, according to Susquehanna.
The analysts said traditional server checks were also positive for Intel (INTC) and Advanced Micro Devices (AMD), but they expect Arm (ARM) hyperscale CPUs to continue gaining in Cloud, led by Amazon (AMZN) unit Amazon Web Services’s Graviton5 and Cobalt 200 from Microsoft (MSFT).
For Optical/AI Networking, the analysts expect continued upside driven by an ever-expanding 800G cycle, along with new opportunities in optical circuit switches, or OCS, and co packaged optics, or CPO. Industrial remains mixed as Global Purchasing Managers’ Index, or PMIs, trended flattish in the fourth quarter, though some, such as Analog Devices (ADI) and Microchip (MCHP), are seeing better near-term trends, according to the analysts.
The analysts noted that the Eurozone PMI declined further into contraction territory, a negative for EU-exposed analog companies such as Infineon Technologies (IFNNY) (IFNNF). However, the analysts added that the data center end market is increasingly a bright spot for Industrial semis, with exposure broadening across Susquehanna’s coverage.
“Lastly, Auto remains a generally weaker end market as Tesla 4Q deliveries were worse than expected, while US vehicle sales also declined. That said, the reduction of tax exemptions for NEV purchases in China may provide a modest tailwind for 4Q. Overall, we note a moderately better setup for 4Q given Street expectations are below typical seasonality,” said Rolland and his team.
Price Target Changes
Analog Devices (ADI): Price target increased to $360 from $350 (Rating: Positive)
Coherent (COHR): To $235 from $160 (Positive).
Fabrinet (FN): To $570 from $550 (Positive).
Lumentum (LITE): To $420 from $230 (Positive).
Lattice Semiconductor (LSCC): To $100 from $80 (Positive).
Microchip Technology (MCHP): To $90 from $75 (Positive).
Power Integrations (POWI): To $53 from $50 (Positive).
Synaptics (SYNA): To $105 from $95 (Positive).
Texas Instruments (TXN): To $225 from $200 (Positive).
Qorvo (QRVO): Price target lowered to $90 from $95 (Neutral).
Skyworks Solutions (SWKS): To $65 from $75 (Neutral).
Wolfspeed (WOLF): To $20 from $30 (Neutral).