Key Takeaways
- Citi issued 30-day catalyst watches for upside potential on AMD and Analog Devices before Q1 results
- AMD’s share of the server CPU market climbed to 41.3% in Q4 2025 from 39% in the previous quarter
- Analog Devices and Texas Instruments are implementing 10–15% price increases on analog chips due to rising input costs
- Hyperscaler capital expenditure is forecast by Citi to surge 69% in 2026
- The data center semiconductor market is expected to hit $731 billion by 2028, according to Citi projections
As the semiconductor industry prepares for first-quarter earnings season, Citi analysts have adopted a generally cautious stance but identified two standout opportunities: Advanced Micro Devices and Analog Devices.
The investment bank designated both chip manufacturers with 30-day upside catalyst watches in anticipation of their forthcoming quarterly reports.
For AMD, Citi maintained its Neutral rating while adjusting its price target downward to $248 from $260. The firm implemented a new sum-of-the-parts valuation methodology that separates AMD’s CPU and GPU operations.
Advanced Micro Devices, Inc., AMD
The analysts increased their 2026 earnings per share projection for AMD modestly to $6.38 from $6.34. The upward revision reflects stronger CPU revenue linked to demand for agentic artificial intelligence applications.
AMD continues to capture market share in the server CPU segment. The company’s revenue share reached 41.3% in the fourth quarter of 2025, representing an increase from 39% in the preceding quarter. Meanwhile, Intel’s share has fallen to 58.7%, a significant decline from 89.2% in early 2021.
Both Intel and AMD have communicated plans to customers regarding CPU price increases, with the adjustments scheduled to take effect in March and April.
AMD’s Forward-Looking Position
Despite AMD’s expectation that the second half of 2026 will underperform typical seasonal patterns, the company maintains that its client division can achieve growth. The strategy emphasizes market share expansion and targeting the premium market segment.
Citi anticipates that AMD will exceed Wall Street’s consensus estimates when it reports earnings, powered by improved CPU pricing dynamics and ongoing server market share expansion.
Regarding Analog Devices, Citi maintains a Buy rating with a $400 price target. The catalyst watch for this stock centers on pricing momentum in the analog chip sector.
Industry supply chain discussions at a recent conference revealed that both Analog Devices and Texas Instruments are implementing analog chip price increases ranging from 10% to 15%, attributing the hikes to elevated input costs. Citi’s estimates for Analog Devices currently exceed Street consensus for both the April and July quarters.
Data Center Momentum Continues
The data center segment accounts for 34% of overall semiconductor demand and represents the most robust area of the market. Citi’s models project that capital spending among the five largest U.S. cloud providers will expand 69% in 2026, following a 79% jump in 2025.
The firm forecasts that the total addressable market for data center semiconductors will expand to $731 billion by 2028.
Citi also expressed an increasingly positive view on CPU demand overall, as the industry transitions toward inference and agentic AI workloads that demand greater CPU processing capabilities.
On the downside, Citi anticipates smartphone unit volumes will decline 17% year over year as elevated memory prices pressure demand. Nevertheless, the firm views Apple suppliers Skyworks and Qualcomm as better positioned than peers to weather this headwind.
February’s global PMI data demonstrated sustained strength in computing and communications equipment, which Citi interpreted as evidence that AI infrastructure investment continues to support manufacturing activity.
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