The brokerage upgraded Lumentum to Overweight from Equal Weight, citing improving confidence in demand for AI networking components and stronger earnings potential. Barclays downgraded Allegro MicroSystems to Equal Weight from Overweight, arguing that the stock's valuation already reflects optimism around its data center opportunity while its core automotive business remains weak. The brokerage also cut Penguin Solutions to Underweight from Equal Weight, saying the stock's sharp rally has outpaced fundamentals. Looking across the sector, Barclays said investor expectations heading into earnings remain elevated after a strong first half driven by AI infrastructure spending. Related articlesBarclays upgrades Lumentum, cuts Allegro, Penguin before chip earningsMonster Beverage downgraded to Hold as valuation seen limiting further upsideWells Fargo cuts HubSpot to Equal Weight as AI transition clouds near-term outlook