Advanced Micro Devices, Inc. (NASDAQ:AMD) Downgraded by Morgan Stanley

We recently created a list Wall Street analysts are downgrading these 10 stocks. In this article, we will look at the situation of Advanced Micro Devices, Inc. (NASDAQ:AMD) compared to other companies that received a downgrade from Wall Street analysts. But first, let’s look at what the markets are doing.

Amid expectations for key economic indicators, European futures are rising, signaling cautious optimism among investors as they prepare for the release of key U.S. inflation data and the Federal Reserve’s upcoming monetary policy decision. While Asian stocks faced a downturn, European equity futures, particularly the Euro Stoxx 50 index futures, showed a marginal gain of 0.2%. At the same time, treasury bonds in Asia recorded marginal gains, and the Bloomberg Dollar Index extended its streak of consecutive gains.

In the wake of Wednesday’s release of U.S. Consumer Price Index (CPI) data and the upcoming Fed policy announcement, analysts remain vigilant, aware of the potential for renewed market volatility. Despite market uncertainty, Japanese financial institutions continue to attract investor attention, driven by their unwavering growth trajectory over the past year. Portfolio manager Junichi Inoue of Janus Henderson Investors highlights the undervalued status of these companies, attributing their attractiveness to the upward trend in dividend payouts. Inoue has strategically increased exposure to Japanese financial entities, which now constitute approximately 18.05% of his portfolio. Notable investments include Sumitomo Mitsui Financial Group Inc. and Tokio Marine Holdings Inc. The Janus Henderson Japan Opportunities Fund, under Inoue’s leadership, has significantly outperformed the MSCI Japan Index, delivering a commendable return of 15% this year.

Meanwhile, Hong Kong’s real estate recession persists, deepening by the day and marking a sustained economic downturn reminiscent of the SARS crisis two decades ago. Bloomberg Intelligence data shows that property values, both residential and commercial, have declined by at least HK$2.1 trillion ($270 billion) since 2019. Projections by UBS Group AG and CBRE Group Inc. warn of further declines, highlighting the formidable challenges facing Hong Kong’s real estate sector amid continuing uncertainty.

Market analysts see Indian Prime Minister Narendra Modi’s decision to keep Nirmala Sitharaman as the country’s finance minister as a positive indicator of policy coherence, according to reports from Goldman Sachs and Barclays. Sitharaman’s reappointment and the return of other high-profile figures from the previous Modi administration are being interpreted as a signal of continuity in the government’s policies. Sitharaman’s re-nomination comes at a crucial time as she faces the task of accommodating fiscal demands within the coalition government amid the inability of the Bharatiya Janata Party to secure a majority in the elections. Goldman highlights the potential benefits of keeping ministerial positions unchanged, suggesting that such continuity could strengthen efforts to implement reforms. Similarly, Barclays emphasizes the importance of maintaining focus on infrastructure development and fiscal consolidation, expecting these initiatives to remain central to the Sitharaman-led government’s agenda.

Oil prices fell on Tuesday as cautious investors awaited key data on the U.S. and Chinese Consumer Price Index (CPI) and the outcome of the Federal Reserve’s policy meeting. Brent crude futures fell 13 cents to $81.50 a barrel, while U.S. West Texas Intermediate crude futures fell 7 cents to $77.67 a barrel, according to Reuters. There was a short-lived rise in prices on Monday amid optimism about increased fuel demand over the Northern Hemisphere holiday season, but analysts warned the boost could be short-lived, especially with the possibility of higher interest rates looming. Market strategist Yeap Jun Rong of IG noted that the continued recovery in oil prices may require more conviction, especially amid the broader trend toward a downward move since April. Traders remained in suspense waiting for the release of macroeconomic data from China, in particular regarding inflation data. OANDA senior market analyst Kelvin Wong highlighted the potential impact of China’s Producer Price Index (PPI) on oil prices, expressing concerns about a further slowdown in deflationary trends and its implications for oil demand. Additionally, continued Saudi oil exports to China and higher refining margins provided some support to oil prices. Analysts also drew attention to the possibility of the United States increasing oil purchases from its reserves, especially if the WTI price remains below $79 per barrel. Energy Secretary Jennifer Granholm has indicated plans to replenish strategic crude oil reserves, targeting purchases at around $79 a barrel as stockpile maintenance is expected to end by the end of the year.

In this article, we have listed 10 stocks that have been downgraded by analysts and ranked them according to their market price movement. Negative changes signal that market participants agree with the analysts’ assessment.


02. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Price reaction after the discount: -7.53 (-4.49%)

On June 10, Morgan Stanley made a material revision to its rating of Advanced Micro Devices, Inc. (NASDAQ:AMD), downgrading the company from ‘Overweight’ to ‘Equal Weight’. The change is primarily due to concerns about the company’s valuation and competitive position in the fierce artificial intelligence market in the semiconductor industry. Despite the noteworthy launch of the latest MI300X chip from Advanced Micro Devices, Inc. (NASDAQ:AMD) focused on artificial intelligence, Morgan Stanley’s reserved stance reflects doubts about lofty forecasts about the size of the AI ​​chip market and their potential impact on profit margins.

While appreciating AMD’s achievements in gaining support for its innovative chip from leading tech giants such as Microsoft, Oracle and Meta, Morgan Stanley remains cautious. The company expresses reservations over fluctuations in Advanced Micro Devices, Inc.’s estimates of the size of the AI ​​chip market. (NASDAQ:AMD) and Nvidia’s dominant dominance in the competitive market. Additionally, concerns remain regarding the positioning of Advanced Micro Devices, Inc. (NASDAQ:AMD) as a viable alternative, which could put pressure on profit margins and potentially hamper financial performance.

This rating revision comes against the backdrop of solid stock performance for Advanced Micro Devices, Inc. (NASDAQ:AMD), which is showing almost 100% year-to-date growth. Despite this, the analyst consensus remains cautiously optimistic, maintaining a Moderate Buy rating, which reflects a mix of buy and hold ratings. The market reaction to Morgan Stanley’s downgrade was clear, and the stock price of Advanced Micro Devices, Inc. (NASDAQ:AMD) saw a notable decline of 4.49% on June 10, finally closing at $160.34. This alignment highlights the importance of continuous review and strategic reassessment in the competitive semiconductor industry, particularly in light of changing market dynamics and competitive pressures.

Overall, AMD ranks second among companies that have recently been downgraded by Wall Street analysts. You can visit Wall Street analysts are downgrading these 10 stocks to see the rest of the stocks that reacted to analyst downgrades. While we recognize AMD’s potential as an investment, our belief is based on the belief that AI stock has a better chance of delivering higher returns, faster. If you’re looking for an AI stock that has more promise than AMD but trades at less than 5x earnings, check out our report on cheapest AI stocks.

READ NEXT: Michael Burry sells these stocks and Jim Cramer recommends them.

Disclosure: None. This article was originally published on Insider Monkey.