This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Rough Start for Chip Stocks

SAN FRANCISCO -- Semiconductor stocks began the new year with a dud, thanks to a slew of downgrades from a Wall Street analyst.

Bank of America's Sumit Dhanda released bearish notes some of the chip sector's biggest names Wednesday, including Intel (INTC - Get Report), Advanced Micro Devices (AMD - Get Report) and Texas Instruments (TXN - Get Report).

The downgrades dragged down the entire semi sector, with the Philadelphia Stock Exchange Semiconductor Sector Index slipping 3% to 395 -- its lowest level in 16 months.

The news follows weak monthly sales data from the Semiconductor Industry Association on Monday, in which global chip sales posted the lowest sales growth in at least five years.

Cramer: Ignore the Semi Downgrades

The seasonally slow first half of 2008, and indications of a modest inventory build of PC motherboards, will limit near term upside for Intel, wrote Dhanda, even though the chipmaker's competitive positioning "has never looked better."

Dhanda downgraded Intel from a buy to a neutral rating, as he did with Texas Instruments, Analog Devices (ADI - Get Report), Semtech (SMTC - Get Report) and Power Integrations (POWI - Get Report).

AMD, LSI (LSI) and National Semiconductor (NSM - Get Report) were all downgraded from neutral to sell ratings.

Shares of Intel dropped 5.7%, or $1.52, to $25.14 in midday trading, while Texas Instruments fell 4%, or $1.37, to $32.03.

AMD and LSI -- two of the chip sector's biggest losers in 2007 -- set fresh 52-week lows Wednesday. AMD sank 5.8% to $7.07, while LSI was down 7.3% to $4.92.

Dhanda wrote that despite AMD's steep selloff in 2007, it's still too early to call a bottom on the stock. The company will face even more challenging times in 2008, he said, due to market-share loss, cost structure pressures and optimistic profit margins.

Dhanda now expects AMD to lose $1.26 a share in 2008, instead of his previous estimate of a loss of 76 cents, and puts a $5 price target on the stock.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
LSI $0.00 0.00%
ADI $56.89 -0.94%
AMD $1.83 1.67%
INTC $31.74 1.70%
NSM $14.23 0.21%


Chart of I:DJI
DOW 16,790.19 +13.76 0.08%
S&P 500 1,979.92 -7.13 -0.36%
NASDAQ 4,748.3610 -32.9030 -0.69%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs