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Key Takeaways
- Citi said that Analog Devices, Texas Instruments and other chip stocks have historically outperformed the rest during economic downturns.
- Analog Devices is the bank's "top pick," amid concerns sweeping new tariffs announced by President Trump Wednesday could raise the risk of a recession.
- While the impact of Trump's tariffs is “virtually impossible to assess completely," a recession would hurt firms across the semiconductor industry, the analysts said.
Analog chipmakers Texas Instruments (TXN) and Analog Devices (ADI) could be positioned to outperform other semiconductor stocks during an economic downturn, Citi analysts said Thursday.
High-end analog companies have historically fared better during a downturn than other types of semiconductor firms, Citi said. Analog Devices was the bank’s “top choice” amid concerns that the new tariffs announced Wednesday by President Trump could increase the risk of recession.
The impact of the Trump Administration’s tariffs on semiconductor industry is “virtually unascertainable” given the complexity and diversity of semiconductor supply chain. “If these tariffs caused a recession, then we believe that it would be negative to all semi stocks, and could result in a 20% more downside,” said the analysts.
Analog Devices shares fell by over 9% on Thursday, while Texas Instruments shares fell by close to 8%. Other chips stocks also tumbled, dragging the PHLX Semiconductor Sector Index (SOX) down nearly 10% amid a broad-based decline. (Read Investopedia’s coverage of today’s market here.
