Semiconductor stocks like Nvidia have soared over the last few quarters, driven higher by robust demand for chips amid a global supply shortage.
But the tide may be turning for semiconductor manufacturers, 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 research note.
Stein noted the cuts related mostly to production in the second quarter, but demand throughout the second half of the year remained strong. While a single-quarter adjustment or a temporary headwind was possible, he was concerned that “a combination of just enough demand destruction and just enough additional supply is leading to a traditional cyclical downturn.”
As a result, Stein adjusted his price targets for several key semiconductor stocks, including
Advanced Micro Devices (ticker:
NVDA). His new price target for AMD is $111, down from $144, while Intel’s target was cut to $49 from $53. He retained a Hold rating on both the stocks.
Nvidia remained a Buy for Stein, even though he lowered his price target to $298 from $347. While he is constructive on the stock and continues to rate it a Buy, he said near-term price effects could become more volatile.
His favored stocks were
NXP Semiconductors (