Advanced Micro Devices (NASDAQ:AMD) fell more than 5% in early Thursday trading, leading the semiconductor industry lower, as tech stocks fell sharply following a hawkish outlook from the Federal Reserve and weak consumer spending.
On Thursday, Morgan Stanley analyst Joseph Moore said that AMD (AMD) had replaced Lam Research (NASDAQ:LRCX) as the firm’s top semiconductor stock for 2023, pointing out that the Dr. Lisa Su-led AMD has not really participated in the rally in semiconductor stocks over the past couple of months.
Moore, who rates both AMD (AMD) and Lam Research (LRCX) overweight, noted that the outlook for the industry going into next year is still “challenging,” making the firm cautious even as stocks have rallied in recent weeks, including a 50% rise for Lam.
“Lam remains [overweight] and is our preferred stock in semicaps, and we definitely think that some relative rerating was in order, but the magnitude of the rally saps our enthusiasm somewhat,” Moore wrote in a research note. “AMD meanwhile has also rallied, but remains the worst performing stock in large cap despite the fact that their server roadmap demonstrably improved its technology leadership position over the course of the year.”
Semiconductor stocks tied to smartphones, such as Qualcomm (QCOM), Skyworks Solutions (SWKS) and Qorvo (QRVO) fell 3.7% and 2.5% and 2.5%, respectively as the U.S. government said that retail spending in November decline 0.6% from October.