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Dreamstime
Semiconductor shares like Nvidia have soared over the previous couple of quarters, pushed increased by strong demand for chips amid a worldwide provide scarcity.
But the tide could also be turning for semiconductor producers, warned 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 in a analysis notice.
Stein famous the cuts associated principally to manufacturing within the second quarter, however demand all through the second half of the 12 months remained sturdy. While a single-quarter adjustment or a short lived headwind was doable, he was involved that “a combination of just enough demand destruction and just enough additional supply is leading to a traditional cyclical downturn.”
As a outcome, 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 minimize to $49 from $53. He retained a Hold ranking on each the shares.
Nvidia remained a Buy for Stein, regardless that he lowered his worth goal to $298 from $347. While he’s constructive on the inventory and continues to fee it a Buy, he mentioned near-term worth results might turn out to be extra unstable.
His favored shares have been
NXP Semiconductors
(
NXPI
),
Analog Devices
(
ADI
), and
ON Semiconductor
(
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 during the last seven quarters, however have since begun to normalize, with semi shares off 20% from their peak final December, Stein mentioned.
AMD inventory was down 2.7% to $100.91 on Friday. The inventory has misplaced nearly 30% this 12 months. Intel was down 0.7% to $47.25, whereas Nvidia was down 4.2% to $231.96.
Write to Sabrina Escobar at sabrina.escobar@barrons.com