"Excessive computing power" is purely unnecessary! Citigroup predicts differentiation in the outlook of US chip stocks: bullish on Micron Technology, Inc. (MU.US), bearish on Qualcomm (QCOM.US).

Citigroup analysts stated in a research report, "With the expectation of an increase in DRAM chip prices in the second half of 2026, we are putting Micron Technology, Inc. (MU.US) on the watchlist for positive catalysts; at the same time, due to weak growth in smartphone sales, we are putting Qualcomm (QCOM.US) on the watchlist for negative catalysts." After a thorough analysis of the semiconductor industry, Citigroup analysts stated that concerns about potential "compute oversupply" resulting from Meta Platforms (META.US) entering the cloud computing business are "overblown." The analysts said, "Fundamentally, demand for AI computing is still outstripping supply, as evidenced by a recent 20% increase in AWS EC2 GPU prices. We believe that the shortage of DRAM is the biggest constraint on compute supply at present." Citigroup also expressed optimism for AMD (AMD.US) gaining market share in the GPU market in the second half of the year; meanwhile, Texas Instruments Incorporated (TXN.US) is expected to see an increase in supply chain chip orders to NVIDIA Corporation (NVDA.US) in the second half of the year. Citigroup also sees potential in Applied Materials (AMAT.US), as semiconductor fab equipment capital expenditures are expected to reach $250 billion or higher in 2028, and Applied Materials has a favorable combination of DRAM business and lower valuation compared to its industry peers. The analysts added that there are some risks in focusing on the chip market for non-Apple Inc. (AAPL.US) smartphones. It was reported that manufacturers such as OPPO and Vivo have lowered their smartphone shipment targets. In pre-market trading on Monday, as of the time of writing, the chip sector rebounded, with Micron Technology, Inc. up nearly 4% in pre-market trading, Qualcomm up nearly 2%, AMD up over 4%, Texas Instruments Incorporated up over 2%, and Applied Materials up nearly 6%.