Key Highlights
- Citi places 30-day positive catalyst watches on AMD and Analog Devices before Q1 results
- AMD captured 41.3% server CPU revenue share in Q4 2025, expanding from 39% in Q3
- Analog chip manufacturers implementing 10–15% price increases driven by elevated input costs
- Hyperscaler capital expenditure forecast to expand 69% through 2026
- Data center semiconductor opportunity projected at $731 billion by 2028
As the semiconductor industry prepares for first-quarter earnings, Citi analysts have identified two standout opportunities within an otherwise measured outlook: Advanced Micro Devices and Analog Devices.
The financial institution assigned 30-day positive catalyst watches to both companies in anticipation of their quarterly reports.
While maintaining its Neutral stance on AMD, Citi adjusted its price objective downward to $248 from $260. This revision reflects a new sum-of-the-parts methodology that separately evaluates AMD’s CPU and GPU operations.
Advanced Micro Devices, Inc., AMD
The firm modestly increased its 2026 earnings per share projection for AMD to $6.38 from $6.34. This adjustment reflects stronger CPU revenue tied to emerging agentic AI workload requirements.
AMD continues to expand its server CPU footprint. The company’s revenue share climbed to 41.3% during the fourth quarter of 2025, representing meaningful sequential growth from 39% in the previous period. Meanwhile, Intel’s position has contracted to 58.7%, a significant decline from 89.2% in early 2021.
Both major x86 processor manufacturers have communicated pricing increases to customers, with implementation scheduled for March and April.
AMD’s Performance Trajectory
AMD management anticipates below-seasonal trends for the second half of 2026, yet the company maintains growth expectations for its client segment. Strategic priorities include market share expansion and strengthening position in premium product categories.
Citi anticipates AMD will exceed consensus estimates when reporting earnings, propelled by CPU pricing strength and sustained server market expansion.
For Analog Devices, Citi maintains a Buy rating alongside a $400 price objective. The positive catalyst watch centers on pricing dynamics within the analog semiconductor market.
Industry conference discussions with supply chain participants revealed that both Analog Devices and Texas Instruments are implementing 10% to 15% price increases, justified by elevated input costs. Citi’s financial models for Analog Devices already exceed Street consensus for both the April and July quarters.
Data Center Momentum Continues
Data center applications represent 34% of total semiconductor consumption and continue delivering the strongest growth within the industry. Citi projects capital expenditure from the five leading U.S. cloud infrastructure providers will surge 69% in 2026, building on a 79% expansion in 2025.
The bank forecasts the total addressable market for data center semiconductors will reach $731 billion by 2028.
Citi has adopted a more favorable view on CPU demand overall, recognizing the industry transition toward inference and agentic AI applications that demand greater CPU computational resources.
On weaker industry segments, Citi forecasts smartphone unit shipments will decline 17% year over year as elevated memory pricing pressures demand. The firm views Apple suppliers Skyworks and Qualcomm as relatively protected compared to other mobile-focused companies.
February global PMI indicators demonstrated sustained strength in computing and communications equipment, which Citi interprets as evidence that AI infrastructure investment continues supporting manufacturing activity.
