Why Citi Sees Upside in These 2 AI Semiconductor Stocks Ahead of Earnings

Citigroup is heading into the first-quarter semiconductor earnings season with a cautious view, but it sees near-term upside in Advanced Micro Devices AMD +1.23% ▲ and Analog Devices ADI +2.83% ▲ . The firm expects earnings-related catalysts and improving demand trends to support both stocks in the near term.

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Citi also pointed to strong data center demand as a key driver for the sector. Data centers account for about 34% of total semiconductor demand, supported by ongoing investment in AI infrastructure. The firm expects capital spending by the five largest U.S. cloud companies to rise 69% in 2026, following a 79% increase in 2025. It also sees the total data center chip market reaching $731 billion by 2028.

AMD Sees Upside from Pricing and Share Gain

Citi expects AMD stock to rise in the near term, especially around its Q1 earnings. The positive view is driven by improving CPU demand, supported by growing use of AI across enterprise and cloud workloads. The firm also expects pricing to play a key role, noting that both AMD and Intel INTC +0.79% ▲ plan to raise CPU prices starting in March and April.

At the same time, AMD continues to gain share in the server market, with revenue share rising to 41.3% in Q4 2025 from 39% in the prior quarter.

Citi also raised its 2026 earnings per share estimate slightly to $6.38, reflecting stronger demand trends. Looking ahead, Citi expects some softness in the second half of 2026. However, it believes AMD’s PC business can still grow, supported by market share gains and a focus on higher-end products.

Nevertheless, the firm maintained a Neutral rating on the stock and lowered its price target to $248 from $260, still implying about 13% upside.

ADI Gains from Pricing Strength and Low Inventory

Citi sees near-term upside in Analog Devices. It maintained a Buy rating on the stock with a $400 price target, implying about 22% upside.

The key driver is pricing. Industry checks show that Analog Devices is raising analog chip prices by 10% to 15% to offset higher input costs. This should help support margins and earnings in the coming quarters.

In addition, Citi’s estimates for ADI are already above Wall Street consensus. This raises the chances of a positive earnings surprise, which could lift the stock.

At the same time, analog chip inventories appear to have bottomed, setting the stage for a recovery. With demand improving across industrial and data center markets, Analog Devices is well placed to benefit from the next growth cycle.

Which Is the Better AI Chip Stock, According to Analysts?

We used TipRanks’ Comparison Tool to see which of the above-mentioned stocks analysts favor. According to analysts, AMD stock has the higher upside potential of 29.29%.

Investors can dig deeper to decide which AI chip stock best fits their strategy. Below is a screenshot for reference.

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