Sector Snap: Broadpoint Downgrades Chips

NEW YORK (AP) — Several chip stocks took a hit Wednesday after a Broadpoint AmTech analyst downgraded the semiconductor sector, saying there is a "good risk of inflated expectations" for the industry.

"Our downgrade today to equal weight is in response to a faster-than-expected recovery to demand levels in both the PC and handset space," analyst Doug Freedman wrote in a note to investors. He lowered his rating on the sector to "equal weight" from "overweight."

Freedman lowered Advanced Micro Devices Inc., Nvidia Corp. and Analog Devices Inc. to "neutral" from "buy" as part of the sector downgrade.

Freedman said he expects the semiconductor market to continue to recover from the recession, and possibly even see better-than-expected results in the third and fourth quarters of this year.

But, he added, given the volatility of the sector, among other reasons, there is a risk of inflated expectations for the shares.

"One of the cornerstones to our call today is that investors should take a more measured approach to semiconductor investing and play a little defense at this time of year," the analyst said.