Citigroup has revised its outlook on the semiconductor industry, citing a potential broader cycle driven by rising demand for CPUs, data centres, and automotive applications, signalling a possible investment rebound after recent declines.
Citigroup has turned more constructive on semiconductors, arguing that the sector’s recent slide may be giving investors an entry point rather than a warning sign. According to Investing.com, the bank now sees a strong upswing in central processing unit demand and has lifted its long-term market estimate, with the chip industry gaining support from healthy data centre spending and an improving backdrop for some industrial and automotive applications.
The shift matters because Citi’s new view suggests the semiconductor cycle may be broader than the latest pullback implied. The bank now expects the CPU market to expand at a 52% compound annual growth rate and to reach $237bn by 2030, a forecast that it says is ahead of assumptions from AMD, ARM Holdings and Nvidia. Citi sees AMD as the main beneficiary of what it described as a CPU renaissance, with Intel a secondary winner.
That optimism follows a rough summer for chip shares. Investing.com reported that semiconductor stocks fell 18% over the season, even as Citi pointed to a busy conference calendar and persistent demand from data centres as reasons to expect a rebound. The bank has said data centre demand accounts for 34% of the semiconductor total addressable market, while automotive and industrial uses, which make up 21%, are still recovering.
The brokerage’s more upbeat stance is broadly in line with other signs of strength across the industry. Reuters previously reported that Intel raised its revenue forecast on stronger demand for data centre products and a recovery in PCs, while the BBC has linked the sector’s gains to cloud computing and artificial intelligence. That broader demand picture has also lifted related optical technology names, with Coherent, Lumentum and Applied Optoelectronics among the stocks to rise after Citi’s latest remarks, according to Investing.com.
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