Barclays downgraded the shares of chip makers AMD (AMD) and Cirrus Logic (CRUS) to Underweight, its equivalent of a sell rating, from Equal Weight. The firm is not very impressed by AMD's products and advises investors to buy stocks of companies that have clearer exposure to Apple's (AAPL) iPhone 8 than Cirrus. AMD: After attending the launch of AMD's new Epyc chips and reading third party reviews, Barclays analyst Blayne Curtis says that he is "unconvinced" that AMD's products will generate enough revenue to justify its current valuation. The stock is expensive even based on a long-term earnings per share target for the company of 75c, according to Curtis, adding that he does not expect the company to come close to reaching that level. He kept a $9 price target on the shares.

CIRRUS: Although the company's results can still meet consensus estimates this year, it's better to buy the shares of chip makers with more exposure to Apple's upcoming iPhone 8, according to Curtis. He identified Broadcom (AVGO) as one such company. Additionally, Curtis indicated that he does not expect Cirrus' headphone adapter, which generates revenue of $1 per device, to be included in future iPhones. Furthermore, he warned that the company's wired headphone, which also generates $1 per device, may be eventually phased out due to efforts to utilize wireless headphones. The analyst kept a $55 price target on Cirrus shares.

PRICE ACTION: In morning trading, AMD sank 3% to $13.40 while Cirrus Logic slid 6.7% to $60.96.