Investing.com -- In a research note released on Tuesday, Citi analysts named Analog Devices (NASDAQ:ADI) as their new top pick in the semiconductor sector.
The move comes after the firm's update of its semiconductor stock ranking table, following a price target adjustment for Micron Technology (NASDAQ:MU) and an upgrade of Texas Instruments (NASDAQ:TXN). Citi remains bullish on the broader semiconductor industry.
Citi cited ADI's lower downside risk in the automotive segment compared to other analog names, especially given the company's recent earnings announcement.
This reduced risk is said to position ADI favorably amid market uncertainties, leading Citi to elevate the stock to the top spot in its ranking.
"ADI is our top pick," the Citi analysts stated, adding that they see "lower downside risk in Autos versus other analog names given they have just announced earnings."
Broadcom (NASDAQ:AVGO) and AMD (NASDAQ:AMD), two companies that are significant players in the artificial intelligence (AI) space, continue to hold Citi's second and third spots, respectively.
The firm remains optimistic about these companies, though it did express some concerns about potentially lower margins in their AI businesses.
Meanwhile, TXN was moved up to Citi's fourth pick from tenth, as analysts anticipate rising gross margins.
Citi wrote: "We would see any share-price weakness as an enhanced buying opportunity."
MU was shifted from the top spot to fifth place due to anticipated lower consensus estimates. However, Citi remains confident that the DRAM inventory correction will resolve in the next couple of quarters.
Lastly, Microchip Technology (NASDAQ:MCHP) remains Citi's lowest-ranked Buy-rated stock, with the firm waiting for further catalysts to drive orders and performance improvements.