Written by Brenda Nakalema

Nvidia, AMD, and Intel Cut Price Targets Amidst Slowing Semiconductor Demand

The last few quarters saw demand for semiconductor stocks skyrocket amidst the swelling demand and exacerbated by the global supply …

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The last few quarters saw demand for semiconductor stocks skyrocket amidst the swelling demand and exacerbated by the global supply shortage. However, the situation might be changing for semiconductor manufacturers, said Truist analyst William Stein.

“On Wednesday afternoon, we learned of a sudden negative shift in demand signals from a wide swath of computer, consumer, and communications OEMs (Original Equipment Manufacturer) to at least some of their semi suppliers,” he wrote.

According to Stein, price cuts were mostly connected to production in the second quarter, even as demand held up strong throughout the year’s second half. Although a single-quarter adjustment or temporary headwind was quite possible, he remained concerned that ” a combination of just enough demand destruction and just enough additional supply is leading to a traditional cyclical downturn.”

Because of this, Stein adjusted the price targets he’d earlier set for several key semiconductor stocks, including Advanced Micro Devices (ticker: AMD), Intel (ticker: INTC), and Nvidia (ticker: NVDA). The new price targets he set are: AMD is $111, a drop from $144, while Intel’s target was cut from $53 to $49. He retained a Hold rating on both stocks.

He maintained a buy rating for Nvidia, even though he lowered his price target from $347 to $298. While he is still enthusiastic about the stock and continues to rate it a Buy, he noted that near-term price effects could become more volatile.

His favoured stocks were NXP Semiconductors (ticker: NXPI), Analog Devices (ticker: ADI), and ON Semiconductor (ticker: ON), which in his opinion, were less exposed to demand from the computer, communications, and consumer segments and were more reliant on industrial and auto demand.

Semiconductor stocks have been highly volatile over the last seven quarters and have only recently begun to normalize, with semi stocks off 20% from their peak last December, Stein said.

AMD stock dropped 2.7% to $100.91 on Friday. The stock has lost nearly 30% of its value this year. Intel was down 0.7% to $47.25; Nvidia dropped 4.2% to $231.96