Citigroup advised investors to treat the recent pullback in semiconductor stocks as a buying opportunity, arguing that fears of an AI spending slowdown are overblown.
In a note issued Tuesday, Citi singled out Nvidia and Broadcom, maintaining Buy ratings on both names and setting price targets of $315 for Nvidia and $515 for Broadcom.
Management teams at the two chipmakers have pushed back against AI spending concerns, noting that underlying infrastructure demand remains robust—a stance that aligns with Citi's constructive outlook.
Broadcom CEO Hock Tan reaffirmed the company's fiscal 2027 AI semiconductor revenue target of $115 billion.
Citi highlighted the strategic importance of AI leadership, particularly given intensifying U.S.-China technology competition, as a factor making a significant pullback in AI investment unlikely. President Donald Trump has echoed the view that the United States must maintain its technological edge over China.
While safety and policy debates could temper the pace of frontier model development, Citi said sustained demand for AI inference alongside continuous supply constraints should support further capital investment across the ecosystem.
The bank also argued that a slower or more gradual rollout of AI infrastructure demand could ultimately prove beneficial for semiconductor stocks, as it may help ease execution risks and validate valuations over time.
