AMD Shares Plummet After Crypto Plateau Prediction

AMD shares plummeted today after Morgan Stanley predicted its cryptocurrency-inspired boon will crash in 2018. Specifically, Morgan Stanley reduced AMD’s share rating from equal-weight to underweight. In other words, the financial services company now considers AMD shares overvalued. Therefore, in this case, “underweight” means investors should reduce their stock holding. Effectively, the firm is telling investors to sell AMD stock. Morgan Stanley’s justification for its underweight rating is an impending deceleration of the cryptocurrency trend; AMD’s graphics card sales are particularly benefitting from high demand by crypto miners.

Morgan Stanley’s Crypto Plateau Prediction

Joseph Moore, a Semiconductor Industry Analyst at Morgan Stanley, wrote to clients (via CNBC):

“[AMD’s] fundamental outlook is not quite as robust as microprocessor momentum has been slow to build, offset by cryptocurrency gains. [Morgan Stanley believes] 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 adds that Morgan Stanley expects “[C]ryptocurrency to gradually fade from here, consoles to decline, and graphics to be flattish. However, Moore does praise AMD’s accomplishments this year. He does, though, stress that AMD’s downturned rating is in anticipation of a weaker 2018.

AMD Shares Drop

As a result of Morgan Stanley’s downgraded rating, AMD shares dropped nearly 10% today. However, AMD stock is still 64% up over the last year, thanks to the release of both its Vega GPU and Ryzen CPU architectures.