Citigroup has placed Advanced Micro Devices on a 30-day positive catalyst watch list. This move is based on expectations of rising demand, driven by growth in artificial intelligence and data centers.
The firm indicated that CPU demand is increasing as the market shifts toward inference and AI agent workloads, which require greater processing power. Citigroup stated that capital expenditures from hyperscale cloud providers will grow by 69% this year, with the total addressable market expected to reach $731 billion by 2028.
The institution also noted that analog chip prices are projected to rise by 10% to 15% due to higher input costs, a trend from which Analog Devices stands to benefit. Despite broader economic uncertainties, the pricing environment suggests that key semiconductor segments will continue to perform well.
Citigroup analysts further pointed out that global manufacturing indicators remain robust, particularly in computing and communications equipment. This indicates that investments in AI infrastructure are helping sustain momentum in the sector.
Smartphone shipments may decline by as much as 17% this year as a result of rising memory prices. However, companies partnered with Apple's premium ecosystem, such as Skyworks Solutions and Qualcomm, are expected to remain relatively insulated.
Upcoming earnings reports are likely to draw investor attention, as they will reveal whether AI-driven demand can translate into sustained revenue growth and improved profit margins.
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