Investors shouldn't expect a repeat of 2021's banner performance for Advanced Micro Devices this year, according to Piper Sandler. Analyst Harsh Kumar downgraded the chip stock to neutral from overweight, saying in a note to clients on Thursday that AMD's stock may be bumping up against a ceiling as growth slows. "Our downgrade is driven by a combination of factors: 1) our concerns about a slowdown in the PC market during 2022, 2) the earnings and growth headwind from closing the Xilinx deal, and 3) the broader market dynamics around high-multiple, high-growth technology stocks. Given these three dynamics, we feel there is more downside risk than upside risk at this point in time," Kumar wrote. AMD was a winner for investors in 2021, gaining roughly 57%. However, shares of AMD have struggled in January along with other high-growth tech stocks, falling more 10%. The shares were off 1.3% in premarket trading Thursday. Though the company's fundamentals appear strong, it may be hard for it to regain that ground, according to Piper Sandler. "We do not see the company missing estimates over the next two quarters, but ultimately, we do see a combination of slower growth and a slowing PC environment burdening the stock. In our eyes, this represents a high multiple set-up coupled with a slowdown in growth," the note said. Piper Sandler lowered its price target on the stock to $130 per share from $140. The new target is just 1.3% above where the stock closed Wednesday. — CNBC's Michael Bloom contributed to this report.
An Advanced Micro Devices computer chip.
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Investors shouldn't expect a repeat of 2021's banner performance for Advanced Micro Devices this year, according to Piper Sandler.