Textual content measurement
Dreamstime
Semiconductor shares have soared over the previous couple of quarters, pushed greater by sturdy demand for chips amid a worldwide provide scarcity.
However the tide could also be turning for semiconductor producers, warned Truist analyst William Stein.
“On Wednesday afternoon we discovered of a sudden unfavourable shift in demand alerts from a large swath of pc, client, and communications OEMs [original equipment manufacturer] to no less than a few of their semi suppliers,” he wrote in a analysis word.
Stein famous the cuts associated principally to manufacturing within the second quarter, however demand all through the second half of the 12 months remained robust. Whereas a single-quarter adjustment or a brief headwind was doable, he was involved that “a mixture of simply sufficient demand destruction and simply sufficient further provide is resulting in a standard cyclical downturn.”
Consequently, Stein adjusted his worth targets for a number of key semiconductor shares, together with
Advanced Micro Devices
(ticker:
AMD
),
Intel
(
INTC
), and
Nvidia
(
NVDA
). His new worth goal for AMD is $111, down from $144, whereas Intel’s goal was reduce to $49 from $53. He retained a Maintain score on each the shares.
Nvidia remained a Purchase for Stein, though he lowered his worth goal to $298 from $347. Whereas he’s constructive on the stock and continues to charge it a Purchase, he mentioned near-term worth results might grow to be extra unstable.
His favored shares have been
NXPI
),
ADI
), and
ON
), which he mentioned have been much less uncovered to demand from the pc, communications, and client section and have been extra reliant on industrial and auto demand.
Semiconductor shares had been on a tear over the past seven quarters, however have since begun to normalize, with semi shares off 20% from their peak final December, Stein mentioned.
AMD inventory was down 1.5% to $102.23 on Friday. The inventory has misplaced nearly 30% this 12 months. Intel was down 1% to $47.10, whereas Nvidia was down 2.4% to $236.38.
Write to Sabrina Escobar at sabrina.escobar@barrons.com