AMD shares fall after Morgan Stanley downgrades on Crypto outlook

Advanced Micro Devices Inc. (NASDAQ: AMD) shares slipped again on Monday after Morgan Stanley badysts had downgraded its ratings saying that cryptocurrency mining and gaming console demand will be in less demand in 2018, according to CNBC.

AMD shares fell over 6 percent shortly during midday on Monday.

AMD’s “fundamental outlook is not quite as robust as microprocessor momentum has been slow to build, offset by cryptocurrency gains,” badyst Joseph Moore wrote in a note, “We believe that AMD’s graphics surge has been caused by a sharp increase in sales of graphics chips to cryptocurrency miners. We expect this to meaningfully decelerate next year.”

Moore had lowered his price target for AMD from $11 to $8, representing a 32.4 percent decrease from Friday’s closing price.

Moore predicts that cryptocurrency related sales for AMD’s graphic cards will decrease by nearly 50 percent, or a $250 decrease in revenue, in the following year. He also forecasts that video game console demand will decline by 5.5 percent in 2018.

Graphic processor chips are used by cryptocurrency miners to “mine” for cryptocurrencies more efficiently and faster than CPU. GPU’s are also mainly used for gaming or graphical purposes as well. GPU’s will have more cores than a CPU, meaning that it can handle much more instructions at a higher frequency clock.

AMD released its earnings last week on Tuesday and shares plummeted by 13.5 percent, although the company had topped estimates. Shares fell sharply after AMD had stated that the company expects revenue to fall 15 percent in the fourth quarter.

Since its earnings release until midday trading hours on Monday, AMD shares have now fallen by 18.2 percent.

Zacks badysts’ estimate revenue to be $1.22 billion for the fourth quarter, compared to the $1.64 billion in the third quarter. Analysts also forecast for an EPS decrease to $0.02 from $0.10 quarter over quarter.

Wall Street badysts consensus remains as a hold for AMD.


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