Barclays is Optimistic on Semiconductor Stocks. Qualcomm, Nvidia and AMD Looks Promising!

Analysts at Barclays issued an optimistic outlook for semiconductor companies into 2023, noting that it is "getting more positive" with upgrades and higher price targets for some big names. Referencing their prior "extremely negative" outlook for 2022, the Barclays team expressed their "New Year's resolution" to become more positive on the group. Despite acknowledging that they were still "modeling estimates below for nearly every name in their coverage", the report highlighted opportunities in data centers, PCs, handsets and AI, which has been gaining attention due to the recent hype around Chat GPT and other generative AI technologies.

It appears that generative AI (such as Chat GPT) holds potential for real-world applications, causing analysts to upgrade Advanced Micro Devices (ticker: AMD) to Overweight from Equal Weight, with a price target of $85, up from $70.The analysts also noted that Nvidia (NVDA) is at the forefront of GPU/AI, maintaining their Overweight rating and raising the price target to $250, up from $170. Though the group didn't become as discounted as during other downturns, money is still flowing into the semiconductor sector, precluding the chance of testing October lows.

Barclays is optimistic about Qualcomm (QCOM), upgrading it to Overweight from Equal Weight and raising its price target to $150 from $120. The analysts see sustained growth opportunities in autos and Internet-of-Things connected devices, as well as potential tailwinds from China and premium chip segment success. They noted that China may shift from a headwind to a tailwind in the second half of 2023 and that Qualcomm is the clear leader at the high-end with no sign of a price war. Although Barclays has a more cautious outlook on Applied Materials (AMAT) +3.29%, downgrading it to Underweight from Equal Weight due to semiconductor capital equipment concerns.

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