Shares of Advanced Micro Devices (AMD) were downgraded to Equal Weight from Overweight at Morgan Stanley. The analyst cited valuation concerns for the downgrade while maintaining a $176 price target.

Yahoo Finance's Seana Smith and Madison Mills discuss the call in the video above.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Stephanie Mikulich.

Video Transcript

All right, let's take a look at A MD because shares are slipping today after getting a downgrade from Morgan Stanley, now they lowered their call on the stock to equal weight from overweight.

They maintain though their price target of 100 and 76 bucks a share just above where it's trading today.

And on the firm saying that investor expectation for AM DS A I business seems too high.

So really essentially what this call is calling into question is the current valuation of the stock.

And they're saying, given those very lofty expectations that street is anticipating up until this point, they don't really see much room here to the upside from the current value.

And he also went on to say that he thinks A MD looks very expensive when you compare it to NVIDIA.

And when you compare it to a name like Broadcom two stocks that he sees likely more likely here to see upward revisions on their A I businesses.

So again, they downgraded the name, they maintained that 176 price target.

Again, on those valuation concerns, he actually at this point and that's a name that he actually ended up upgrading here to overweight.

So again, a bit of a contrast in terms of what you see valuation rise within the A I Yeah, it's really interesting to note that because there was a question about whether or not this stock looked expensive in comparison with an N video with a broad com where like we were saying earlier, the valuations just make a little bit more sense given the revenue picture that we're seeing coming out of those names there.

Having said that this is a name that has 50 buys holes in zero cells.

If you look a lot across the analyst ratings that are tracked by Bloomberg here, the average PT price target is still at 188 so seen still some bullish sentiment surrounding this stock.

But the question remains about the kind of growth and room to run moving forward.

Are they going to be able to maintain some of the growth that we've seen in the space?

Is it going to be able to stay in the A I winners bucket when you've got in the kind of soaking up a lot of the energy in that room there, we're going to have to track that moving forward?