Barclays has adjusted its semiconductor research coverage in advance of first-quarter earnings, promoting three companies and downgrading another as it directs investors toward areas it views as offering relative value.
Analyst Tom O'Malley said in a note that in a market "where nearly every name in Semis is sold out through CY27, investors increasingly look to find value or discounts as the fundamental news is largely understood." Against that backdrop, Barclays identified hard disk drives and radio frequency chipmakers as the most compelling opportunities.
Upgrades and revised expectations
Seagate Technology was upgraded to Overweight. Barclays raised its forecast for the HDD market and pointed to Seagate's shift toward 40TB drives as a positive development. The firm projected Mass Capacity drive pricing could increase by as much as 15% year-over-year by 2027 and suggested that the stock's re-rating is "more permanent" given current industry dynamics and a company commitment to lower capital spending. In the same vein, Barclays also raised the price target for Western Digital to $405.
Two radio frequency chipmakers, Skyworks Solutions and Qorvo, were likewise moved up to Overweight. Barclays previously noted that a change in the timing of Apple's lower-end SKU launch had represented a near-term headwind. The bank now characterizes the current environment as a potential "buy the cut event," and cites prospective catalysts such as foldable iPhones and an iPhone 20 anniversary cycle as positive developments that could support these suppliers.
Reinstatements and downgrades
Qualcomm was reinstated at Underweight. Barclays pointed to a difficult handset environment and stated that AI at the edge "is still several years away," leaving Qualcomm without a clear near-term catalyst under the firm's view.
Penguin Solutions was downgraded to Equal Weight. Barclays warned that significant margin compression is likely to persist through 2027 for the company.
Analyst rationale and market backdrop
Barclays' changes reflect its assessment that, with much of the semiconductor fundamental outlook already priced into stocks through calendar 2027, investors will need to look for specific segments that appear undervalued. The bank singled out HDDs and RF components as areas where industry dynamics, product transitions, or upcoming device cycles could create differentiated opportunities.
The note combines forward-looking industry pricing views and company-specific operational factors to justify the rating shifts while emphasizing the absence of clear, immediate catalysts for certain names such as Qualcomm.