Nvidia, AMD, and Intel Price Targets Are Cut. This Analyst Sees Semiconductor Demand Slowing.

“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: AMD
), Intel ( INTC
), and Nvidia ( 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 ( NXPI
), Analog Devices ( ADI
), and ON Semiconductor ( ON
), which he said were less exposed to demand from the computer, communications, and consumer segment and were more reliant on industrial and auto demand.

Semiconductor stocks had been on a tear over the last seven quarters, but have since begun to normalize, with semi stocks off 20% from their peak last December, Stein said.

AMD stock was down 2.7% to $100.91 on Friday. The stock has lost almost 30% this year. Intel was down 0.7% to $47.25, while Nvidia was down 4.2% to $231.96.

Write to Sabrina Escobar at sabrina.escobar@barrons.com