Jefferies: CES 2026 Takeaways – AI Still Biggest Opportunity, Analog/Industrial Trends Better
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Following CES 2026, Jefferies reports an overall constructive tone, highlighting continued robust AI demand and broad-based improvements in analog chips within the industrial sector. The firm maintains its preference for AI computing and connectivity, expressing particular confidence in Broadcom (AVGO) and Nvidia (NVDA) at reasonable valuations. In the analog space, Analog Devices (ADI) and MACOM Technology Solutions (MTSI) are top picks due to their favorable exposure to aerospace, defense, and data center markets.
AVGO's AI backlog stands at $73 billion and is expected to increase, supported by ramping packaging capacity in Singapore. Meanwhile, NVDA's Vera Rubin is on track for a volume ramp in the second half of 2026. On the memory front, dynamics remain healthy, with data center demand effectively offsetting weaknesses in consumer markets. Western Digital's SanDisk (SNDK) anticipates a 7% supply shortage for the year, bolstered by increasing long-term agreements.
Semiconductor capital equipment trades have entered later stages, with stocks like KLAC, AMAT, and LRCX posting significant gains over the past three months. While further upside may require wafer fabrication equipment (WFE) spending to exceed $200 billion, Applied Materials (AMAT) remains the top pick due to a valuation discount. Additionally, Navitas Semiconductor (NVTS) is successfully pivoting toward high-voltage power opportunities in AI infrastructure, leveraging a recent cross-licensing agreement with Infineon to mitigate intellectual property and litigation risks.