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Investing.com -- Broadcom, not Nvidia (NASDAQ:NVDA), is currently the top pick among semiconductor investors, according to a new note from Citi analysts following meetings with clients.
“AVGO in our opinion is clearly the most popular long, and in many cases seemed to be the only long,” Citi wrote.
The firm cited Broadcom’s positioning in the artificial intelligence space, recurring software revenue, and defensiveness as key factors behind the stock’s popularity.
While Nvidia remains highly regarded, it ranks second, with a noticeable drop-off in investor interest compared to Broadcom (NASDAQ:AVGO), according to the bank.
“We would put NVDA as the second most popular long position but after a reasonable drop off,” Citi said.
Analog Devices (NASDAQ:ADI) and KLA also attracted interest, but were viewed more as defensive plays.
“ADI and KLAC are also reasonably well-owned and seen as more defensive stocks given ADI’s high margins and fragmented business and KLA’s outsized leading edge WFE exposure and share gains at TSMC,” the bank said.
On the short side, Texas Instruments (NASDAQ:TXN) was flagged as the most common bearish bet among investors, due largely to concerns about China tariffs.
“Analog semiconductors have become heavily shorted... with TXN being the most popular short,” Citi said.
Elsewhere, Citi raised its estimates on Qualcomm (NASDAQ:QCOM) and placed the stock on a positive catalyst watch, citing better-than-expected handset demand in China.
“Qualcomm did not come up at all in our conversations with investors,” Citi wrote, suggesting sentiment remains low.
But the firm now sees upside to earnings, with second-quarter sales and EPS estimates raised to $11 billion and $2.45, respectively, well above consensus.
Despite widespread recession fears, Citi believes that Broadcom’s AI exposure and stable revenue model make it the clear favorite in a cautious semiconductor market.
