Updated from 6:13 a.m. ET

Advanced Micro Devices Inc. (AMD) - Get Report fell sharply in Tuesday premarket trading, looking set to open 3.7% lower to $13.29 following a downgrade from Barclays.

AMD shares closed at $13.80 Monday and have gained 21.69% since the beginning of the year.

Barclays downgraded the stock to a price target of $9, giving it a rating of underweight from equal weight, saying that the valuation was pricing in a high degree of success but there is little evidence of share gains.

Barclays analyst Blayne Curtis predicted AMD will trade at $9 within a year, implying a 35 percent decline from the last close. The target is 31 percent below the consensus average of $13.01.

TheStreet reported Monday that chipmakers Nvidia Corp. (NVDA) - Get Report and AMD benefited from a cryptocurrency boom in June, but Wall Street is warning that the mining wave could run out of steam soon.

Nvidia shares were down 0.6% in premarket at $163.20, after closing at $164.25 on Monday.

Since the beginning of June, shares of AMD have gained 23.5%, while Nvidia has risen almost 14%, on the back of a surge in demand for GPUs used to mine an alternative cryptocurrency called Ethereum (the units are known as Ether). A wave of bullish reports have come out since then saying that the boost in cryptocurrency mining demand could help Nvidia and AMD rise above a seasonally weaker fiscal second quarter, among other benefits.

But thanks to a steep drop in the prices of cryptocurrencies, the benefits may already be priced into the current quarter, with little left to gain thereafter, according to analysts.

The price of Ether exploded last month, hitting an all-time high of more than $400 on June 12. Since then, it has crashed 65% to a low of roughly $130 on Sunday, before rebounding 24% higher to $170 on Monday.

AMD and Nvidia are tied to Ether because they manufacture the graphics processors used to mine the cryptocurrency. The chip giants aren't connected to Ether's more popular crypto cousin, Bitcoin, however. That's because the algorithm for mining Bitcoins has become too complicated for desktop graphics chips, causing miners to switch to custom designed ASICs (application-specific integrated circuit) chips that are powerful enough to run the mining programs.

If the price of Ether continues to plummet, AMD and Nvidia could see less demand for the cryptocurrency mining chips. Stifel analyst Kevin Cassidy likened it to the gold rush, where people paid big bucks for pickaxes when the price of gold was high, but once the price of gold went down, people got rid of their tools once they were no longer necessary. Similar to this, miners might start dumping the chips, which retail for as much as $800 a piece, for a couple hundred dollars on the secondary market.

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