April 8 - KeyBanc Capital Markets downgraded AMD (AMD, Financial) from Overweight to Sector Weight, citing a drop of over 50% in its stock over the past year. The stock took a big hit recently, losing almost 19% in just one week.

The analysts pointed to concerns about AMD's AI business in China, especially with Intel (INTC, Financial) ramping up competition. They also warned that a price war could hurt AMD's margins. Speaking of margins, the company still has a solid gross margin of 53%, but it could face challenges due to Intel's aggressive pricing.

Even though AMD is relatively cheap, trading at about 13 times the projected 2026 earnings per share (EPS), KeyBanc remains cautious. Historically, when margins get squeezed, semiconductor stocks tend to underperform.

That said, there are some bright spots for AMD. KeyBanc raised its revenue and EPS forecasts, thanks to higher demand for its MI308 products and a boost in personal computer orders. AMD is also seeing solid growth with a 14% increase in revenue and strong liquidity, backed by a solid current ratio of 2.62.