Investing.com -- KeyBanc Capital Markets analysts have revised their targets for several semiconductor companies, citing mixed supply chain findings.
While demand for AI technologies remains strong, the bank said broad-based demand trends remain weak, with China emerging as the lone bright spot in the sector.
In its quarterly supply chain review, KeyBanc noted that while "most end markets are weak," China is seeing signs of recovery, particularly in the auto and smartphone sectors.
The firm highlighted that China’s smartphone demand is growing, driven by government subsidies on handsets, with high-end smartphones performing better than expected.
However, the analysts warned that "demand for the iPhone 16 is weak," as lower-end models continue to struggle in both the U.S. and Europe.
KeyBanc also pointed to mixed results in the AI sector, particularly with GPUs and AI ASICs. “While AI demand remains robust, we’re seeing cross currents across the sector,” the note stated.
It further mentioned that the ramp of Blackwell GPUs is being hindered by “low manufacturing yields” and supply constraints, particularly for NVL server racks, which are significantly underperforming expectations.
The analysts lowered estimates for companies like NVIDIA (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD).
The firm cut its FY26 estimate for data center compute revenues to $185 billion from $200 billion prior.
Meanwhile, KeyBanc trimmed its estimates for AMD’s data center GPU revenues and lowered its price target for the stock to $150. Both Microchip Technology (NASDAQ:MCHP) and ON Semiconductor (NASDAQ:ON)'s price target were cut to $70,
On a more positive note, the firm raised estimates for Qualcomm (NASDAQ:QCOM) and Skyworks Solutions (NASDAQ:SWKS), due to stronger-than-expected demand in China’s smartphone market driven by subsidies.
Despite the mixed outlook, KeyBanc remains optimistic that the sector is nearing the bottom of the cycle.