AMD falls on Bernstein downgrade, citing continued weakness in PC market
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AMD (NASDAQ:AMD) shares fell nearly 2.5% in premarket trading on Tuesday as Bernstein downgraded the semiconductor company, citing continued weakness in the PC market.
Analyst Stacy Rasgon lowered the firm's rating on AMD (AMD) to market perform from buy and cut the per-share price target to $80 from $95, noting that the PC market has continued to deteriorate since the firm's February 2022 upgrade of the Dr. Lisa Su-led company. Additionally, the belief that AMD (AMD) would be "relatively more immune" to channel weakness than its competitors, including Intel (NASDAQ:INTC), has proven incorrect.
"...In recent months we have been growing more wary of potential PC dynamics, both given the market outlook as well as exacerbated by Intel's semi-destructive behavior as of late as they use both price and capacity as a strategic weapon, continuing to overship even amid broader breakdowns in the industry (it seems to us that Intel has decided that if the channel is going to hold parts, it might as well be their parts)," Rasgon wrote in a note to clients. 
Rasgon added that new PC parts from AMD (AMD) have seen "heavy discounts" at retail since being launched less than two months ago, which when combined with rising costs, could result in a risk to the company's gross margins.
"Street numbers call for gross margin expansion going forward into the [second-half] which might be somewhat optimistic unless current client trends prove transitory (we are not convinced they are)," Rasgon added. 
Despite the weakness in the PC space, Rasgon noted that AMD (AMD) has continued to see strength in the datacenter space, with the firm's thesis having played out "in spades," due in part to the company's Genoa chips, compared to Intel's (INTC) many issues with its Sapphire Rapids chips. 
After months of delays, Intel (INTC) finally launched its server chips based on the Sapphire Rapids technology earlier this month.
AMD (AMD) shares soared on Monday after Barclays upgraded it and several other semiconductor and semiconductor-related companies.
Analysts are largely bullish on AMD (AMD). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates AMD a HOLD.