2023-07-05 09:53:40 ET
- Investment firm Citi said on Wednesday that it is staying cautious on semiconductor stocks even as industry data from May showed a larger-than-expected increase.
- Citing data from the Semiconductor Industry Association, Citi analyst Christopher Danely noted that May monthly sales came in at $40.3B, up 5.7% month-over-month, above the seasonality of 3.7% month-over-month and above Citi's own estimate of $38.4B.
- However, the firm still sees chip sales down 15% year-over-year in 2023, due in large part to weakness in the auto market.
- "We remain cautious on the group and highlight [Micron] as our top pick," Danely wrote in an investor note.
- Aside from Micron ( NASDAQ: MU ), Danely also likes ON Semiconductor ( ON ), GlobalFoundries ( GFS ) and AMD ( AMD ), noting that the quartet offer "the most upside" when it comes to increasing margins and earnings per share in the sector.
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Citi stays cautious on chips even as May monthly sales tick up