An upturn in a corner of the semiconductor industry began in the second half of this year, according to Citi. That’s DRAM, or dynamic random-access memory — a type of semiconductor memory needed for data processing. “DRAM pricing has started to rebound in 2H23 as DRAM production cuts start materializing,” the bank said in a Nov. 1 note, noting that DRAM spot pricing has increased by 5% over the past month. The jump in September’s monthly semiconductor sales beat Citi’s estimates. It was up 13% month on month to $49.6 billion, higher than the bank’s estimates of $46.9 billion. The bank cited figures from the Semiconductor Industry Association, which represents the U.S. semiconductor industry. Citi attributed that to higher DRAM sales across the industry, as it was up 92.2% month on month. Overall, the bank said it updated its 2023 semiconductor sales forecast from a 12% year-on-year decline to a 11% decline. That translates to a projected $512.7 billion in sales for 2023, less than 2022’s $574.1 billion, according to the bank. Analysts have been bullish on the DRAM sector this year. As the use of artificial intelligence grows, more and more memory is required. AI servers use four times as much DRAM as normal servers. Top pick and other buy-rated names Against that optimistic DRAM backdrop, Citi named Micron as its top pick. It gave Micron, which produces DRAM and other types of memory, a price target of $85 — given the DRAM pricing rebound. That implies potential upside of around 20%. “If memory demand exceeds memory industry supply, it could lead to higher DRAM pricing, resulting in upside to our estimates on Micron,” Citi said. However, the converse also applies. Citi also named other buy-rated stocks within the sector: Advanced Micro Devices : Citi is optimistic on AMD, driven by its server share gains and AMD’s artificial intelligence opportunity. It gave AMD a price target of $136, implying potential upside of around 26%. One risk, however, is that it competes directly with Intel and Nvidia in the microprocessor and graphics markets, respectively. “Consequently, any fluctuations in market share between AMD and NVIDIA could result in risk to our estimates,” Citi wrote. Analog Devices : Citi gave Analog Devices a price target of $200, implying potential upside of around 21%. It said Analog Devices has geographically diverse exposure, so any prolonged downturn or upturn could result in either a downside or an upside to its estimates. GlobalFoundries : Citi pointed to its “solid execution” and earnings per share growth, giving it a price target of $70 — implying potential upside of around 39%. Onsemi : Given its “superior growth,” Citi gave the stock a price target of $85, implying potential upside of around 27%.