These 2 chip stocks are new Top Picks at Citi

Investing.com -- Citi has moved Texas Instruments (NASDAQ: TXN) and Monolithic Power Systems (NASDAQ: MPWR) to its top Buy-rated analog semiconductor picks following the latest earnings season, saying the group has entered a more favorable phase of the cycle.

"We believe the group is in Phase 2 of our cyclical framework where stocks with product cycles or self-help stories generally outperform the group," analyst Atif Malik said in a Monday note.

For Texas Instruments, Malik highlighted gross margin upside as capital spending moderates and the company increases its focus on data-center-related research and development.

Monolithic Power Systems, meanwhile, is favored as he expects the company “to outgrow the industry led by enterprise data sales product growth.”

Citi remains bullish on the broader sector as well. Malik noted that data-center-related sales for analog companies surged 50–70% year over year in 2025, far exceeding roughly 6% growth for the combined analog and MCU industry. He believes rising exposure to this end market could support valuation multiples as data-center revenue becomes a larger share of sales.

"While the data center exposure is still teens sales exposure of most analog companies, we believe the group could sustain multiple rerating as revenues from the data center end market accelerate to account for more than 25% of sales," the analyst wrote.

Looking ahead, he estimates analog companies’ data-center and AI revenue could grow roughly 70% year over year in 2026.

From a cycle perspective, Citi’s analysis suggests the analog upturn still has room to run. Industry revenue in the current cycle is only modestly above the prior peak and remains below the average expansion seen in past cycles.

Malik therefore believes analog and microcontroller revenue and units “could increase by roughly 30% from current levels and the upturn could last at least another year.”

Within end markets, the analyst sees improving trends in industrial demand alongside stabilizing global manufacturing PMIs, while the automotive segment is expected to remain softer, particularly with China auto production projected to decline in 2026.

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