Broadpoint.Amtech Cautious On Chips; Downgrades AMD, ADI, NVDA

The semiconductor sector is feeling some heat morning from a cautious call on the sector by Broadpoint.Amtech chip analyst Doug Freedman. Freedman and his colleagues downgraded the sector to Equal Weight from Overweight.

Broadpoin.Amtech’s take is that the electronics industry swung more quickly than expected from too much inventory to not enough. The industry, he says, could see stronger-than-expected results in Q3 and Q4, as buyers rebuild depleted inventories. But he thinks that could lead to inflated expectations about underlying demand.

He says some semis may still have 20%-plus upside - but that “new money is often looking for 30%-40% upside before taking on the risk of calling the demand cycle correctly.” He thinks investors “should take a more measured approach to semiconductor investing and play a little defense at this time of year.”

Freedman downgraded Analog Devices (ADI), Advanced Micro Devices (AMD) and Nvidia (NVDA) to Neutral ratings, from Buys.

This morning:

• ADI is down 75 cents, or 2.6%, to $27.80.


• AMD is down 17 cents, or 2.9%, to $5.71.


• NVDA is down 56 cents, or 3.4%, to $15.82.