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Citi analyst Christopher Danely believes that Broadcom is catching up with Nvidia, the benchmark for the artificial intelligence (AI) concept, and becoming the "new favorite" of chip stocks among investors.

Danely revealed in his latest research report that he met with investors last week to discuss their favorite and least favorite chip stocks. As expected by Danely, Nvidia, with the stock code NVDA, is still the most favored chip by investors, followed by Broadcom, with the stock code AVGO.

Danely's report states:

“From our conversations, AVGO appears to be catching up to NVDA as the top holding as AVGO has more AI customers joining (OpenAI and ByteDance) and VMware’s support (note: Broadcom completed its acquisition of VMware last year). We also think investors are a little tired of NVDA.”

On Monday, chip stocks rebounded overall, with Nvidia up more than 4% and Broadcom up more than 2%. However, since July, chip stocks have generally underperformed the broader market, with Nvidia down about 4.4% as of last Friday's close, and Broadcom down about 2% over the same period. This year, Nvidia has more than doubled its gains, up about 138% since the beginning of the year as of last Friday's close, and Broadcom up nearly 41% since the beginning of the year.

Some commentators said that increased competition, high valuations and geopolitical uncertainties have recently weighed on Nvidia's stock price. Some analysts said that with some market tools having failed, there is not much room for AI to drive stock prices.

Despite the recent poor performance of chip stocks, Danely remains "very bullish on the semiconductor sector." However, he also said that he is initiating a "negative catalyst watch" for Micron Technology because competitive headwinds will put pressure on Micron Technology in the short term. His report pointed out that Micron is expected to trade poorly next month because Samsung Electronics' products are expected to obtain HBM (high bandwidth memory) quality certification from Nvidia in the third quarter of this year.

Last week, Wall Street News learned from the supply chain that Samsung Electronics' HBM3E has passed Nvidia's test. The relevant article mentioned that Samsung Electronics uses its own 4nm process technology to manufacture logic chips in HBM4 (sixth generation) products. Currently, the yield rate of Samsung Electronics' 4nm process technology has exceeded 70%.