By Angela Palumbo

After a challenging time for analog chips, a Citi analyst named Texas Instruments as a top stock pick.

Analog chips from companies such as Texas Instruments are used in the industrials, auto, and consumer electronics spaces. Demand in the auto and industrial markets has been under pressure for some time following a surge of pandemic-related demand.

Texas Instruments stock has dropped 3.8% this year as investors are concerned that a potentially weaker economic environment could continue to put pressure on the sector. That decline is still outperforming the 8.5% drop of the tech-heavy Nasdaq Composite index as Wall Street becomes more optimistic on the future for companies that make the less advanced chips.

Citi's Christopher Danely wrote in a research note on Wednesday that he is now bullish on the analog sector "as we believe inventory is low, margins and EPS are close to a trough, and a recovery in sales is imminent which should drive upside to consensus estimates."

Citi analysts rate all of the analog stocks they cover at Buy, including Texas Instruments, Microchip Technology, Analog Devices, and NXP Semiconductors.

"With sales, gross margins and EPS estimates almost back to pre-COVID levels, we believe a recovery will drive 70% average growth to EPS by 2H26 and we are beginning to see signs of such a recovery with multiple analog companies experiencing an increase in bookings," Danely wrote.

Shares of Texas Instruments were up 0.7% on Wednesday to $180.66.

Write to Angela Palumbo at angela.palumbo@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 19, 2025 15:07 ET (19:07 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.