Shares of chipmaking giant Advanced Micro Devices (AMD) - Get Free Report fell on Thursday after analysts at Wells Fargo Securities downgraded the company's shares amid what they see as a too-far, too-fast scenario for the stock.
Shares of AMD were down 1% at $58.26 in morning trading after Wells Fargo Securities analyst Aaron Rakers cut his recommendation to equal weight from overweight, though raised his one-year price target to $64 from $55.
In a note to clients titled, “Time for a Breather,” Rakers said that while he remains positive on AMD's competitive positioning, at current levels and based on his most recent analysis the stock is approaching levels that are discounting 2022 per-share earnings of more than $2.50, which in his view is hitting lofty levels.
The move follows a serious run for AMD’s stock, which on a year-over-year basis had gained nearly 160% at the end of January amid expectations that broader demand for chips that go in everything from mobile phones to new gaming devices has turned the corner, and that AMD is well-positioned for the rebound.
By contrast, shares of Intel (INTC) - Get Free Report were up 44% year on year at the end of last month, while the iShares PHLX Semiconductor ETF (SOXX) - Get Free Report was up 64% over the same period.
The downgrade also follows AMD making new highs on Monday - despite its brethren posting declines - in the wake of Alphabet-owned Google’s (GOOGL) - Get Free Report announcement that it plans to roll out an updated suite of cloud computing offerings powered by AMD’s second-generation Epyc server CPUs (codenamed Rome).