Advanced Micro Devices was downgraded to Neutral from Overweight by analysts at Piper Sandler, who said the downgrade was driven by, among other factors, concerns about a slowdown in the personal computer market in 2022.
The price target on the stock was reduced to $130 from $140.
AMD (ticker: AMD) shares fell 1.8% in premarket trading Thursday to $125.95. The stock has fallen nearly 11% so far this year, swept up in an environment of rising Treasury yields that have been hitting technology stocks. On Wednesday, it fell 2.8% to $128.27, its lowest close since November.
Piper Sandler analyst Harsh Kumar wrote in a note Thursday that in addition to a slowing PC market, AMD’s earnings and growth could be facing headwinds from the closing of the acquisition of fellow chip maker Xilinx (XLNX), and the broader market dynamics around high-multiple, high-growth technology stocks.
“Given these three dynamics, we feel there is more downside risk than upside risk at this point in time,” Kumar said.
The analyst said he doesn’t expect “a breakdown in fundamentals in the near-term” for AMD, and doesn’t see the company missing estimates over the next two quarters. “But ultimately, we do see a combination of slower growth and a slowing PC environment burdening the stock,” Kumar said.
Piper Sandler also cut its rating on NXP Semiconductors (NXPI) to Neutral from Overweight, and decreased the price target to $210 from $235, citing caution over the “broader automotive sector.” The analysts noted how NXP has roughly half of its revenue tied to the automotive market.
NXP shares fell 1.6% in premarket trading to $207.50.
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