NEW YORK (CNNMoney.com) -- Shares of chipmakers Intel and AMD fell sharply Tuesday after analysts downgraded the stocks, warning that once-robust personal computer sales were quickly deteriorating.
Barclays Capital analyst Tim Luke downgraded shares of AMD to "equal weight" from "overweight" and reduced his target price by a buck to $9, noting that PC shipments have remained "subdued." As a result, he said AMD's outlook may be "aggressive."
Similarly, analysts at Robert W. Baird downgraded Intel's shares to "neutral" from "outperform." The Baird analysts noted a "sharp deterioration" in PC orders over the first week of August after July's shipments came in lower than expected.
Analysts at JPMorgan used perhaps the most forceful language, saying that PC order rates in Taiwan were "falling off a cliff," deteriorating sharply during the last part of July. JPMorgan lowered its full-year earnings-per-share outlook on Intel by 6 cents to $1.95 but kept its rating at "neutral."
As recently as July, Intel and AMD reported strong second quarters on the back of booming PC sales, with Intel reporting its "best quarter ever." Those reports had raised the hopes of tech companies and investors that consumers and businesses were once again buying computers. But that tide seems to be shifting, and analysts noted that PC manufacturers have begun to scale back their orders from suppliers.
Other companies reliant on PC sales fell as well. Graphics chip maker Nvidia (NVDA) sank 4%, Microsoft (MSFT, Fortune 500) and Apple (AAPL, Fortune 500) fell less than 2%, and Dell (DELL, Fortune 500) fell nearly 4%. Hewlett-Packard (HPQ, Fortune 500), which had its own share of news late last week when its CEO resigned, was a lone exception, with shares flatlining.
Intel and AMD inked a peace treaty in November after years of lawsuits that accused AMD of patent infringement and Intel of abusing its monopoly position. Intel, the world's largest chipmaker, paid its rival $1.25 billion and agreed to abide by "a set of business practice provisions." In return, AMD dropped all three of its pending lawsuits against Intel.
Intel last week settled with the FTC over antitrust charges, in which the chipmaker was accused of refusing to sell chips to some computer manufacturers that also bought chips from AMD. The ruling had little impact on either Intel's or AMD's stock at the time.
Yahoo CEO Marissa Mayer could get $55 million if Yahoo gets sold and she gets the boot. More
The Dow is down 300 points over the past two days, leaving the index on track for its worst week since early February. Blame fumbled earnings reports from the likes of Apple and Google as well as concerns about the Bank of Japan. More
Now you can watch the SpaceX Falcon 9 rocket land on a barge as if you were standing on the deck of the ship. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More