AMD leads chips lower as Morgan Stanley sees deflation in semiconductor economy
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AMD (NASDAQ:AMD) shares led the semiconductor sector lower on Friday as investment firm Morgan Stanley said it saw deflation in the overall chip economy caused by artificial intelligence.
"AI investment crowding out server spending in cloud as cloud spending budgets are mixed, the acceleration of AI spending is causing temporary weakness in other cloud supply chains, deflating the overall semiconductor economy," a team of analysts wrote in an investor note "We still favor AMD around share gains and prospects for recovery in [the second-half], though timing remains a risk."
AMD (AMD) lost around 3% on Friday, while competitor Nvidia (NVDA) slipped 1.3%. Intel (INTC), which also competes with AMD, saw fractional losses.
Most other semiconductor stocks saw modest losses on Friday, including Texas Instruments (TXN), Analog Devices (ADI), NXP Semiconductors (NXPI) and Broadcom (NASDAQ:AVGO), all of which fell 0.5% or less.
On Friday, European Union antitrust regulators extended their deadline to review Broadcom's (AVGO) proposed deal to buy VMware (VMW) to June 26, adding three days.
Also seeing modest losses were smartphone linked semiconductors, including Qualcomm (QCOM), Skyworks Solutions (SWKS) and Qorvo (QRVO), even as Apple (NASDAQ:AAPL) said it was opening its first online store in Vietnam.
The move to open an online store, which historically has been the precedent to opening a retail store, comes after Apple (AAPL) said on its fiscal second-quarter earnings call that it set new records in several emerging markets.
ON Semiconductor (ON) bucked the trend amongst S&P 500 semiconductor stocks and rose 0.5% around mid-day.
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