Piper Sandler analyst Harsh Kumar downgraded Advanced Micro Devices Inc. to Neutral from Overweight with a price target of $130, down from $140.
The analyst is cautious on the broader automotive sector, saying the pace of orders and strong pricing “may come into question” as supply normalizes in the second half of 2022.
The price target implies that the stock is fair-priced.
Once supply and demand hit parity, it will likely result in a slower pace of orders than the pace seen over the last few years, Kumar notes.
His downgrade of AMD reflects concerns about a slowdown in the PC market during 2022, the “earnings and growth headwind” from closing the Xilinx Inc. deal, and the “broader market dynamics around high-multiple, high-growth technology stocks.”
As such, he feels there is more downside risk than upside risk at this point.
