KeyBanc recently cut its rating on AMD (AMD) to Sector Weight from Overweight, Schwab Network reported today. As reasons for the downgrade, the bank cited tough competition and worries about AMD's China business.

A close up of a complex looking PCB board with several intergrated semiconductor parts.

Intense Competition

KeyBanc is concerned that AMD will fall further behind Nvidia (NVDA) and lose ground to Intel (INTC). As a result, the bank is worried about AMD's revenue outlook.

Moreover, a price war could develop in the chip sector, with AMD being forced to cut prices after INTC already took the latter step, the bank stated.

AMD's China Business Is Facing Steep Risks

And in the wake of the trade war between the U.S. and China, along with already existing restrictions on the export of advanced chips to the Asian country, AMD's revenue from China could decline, KeyBanc believes.

Importantly, the revenue that AMD obtains from selling AI GPUs outside of China is expected to increase very little this year, KeyBanc warned.

The Recent Price Action of AMD Stock

In the last month, the shares have lost 10%, while they are down 32% in the last three months.

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Disclosure: None. This article is originally published at Insider Monkey.