AMD Faces Challenges in AI GPU Market as Analysts Lower Expectations

After Barclays, Goldman Sachs Also Sours On AMD: "We Now Expect The Stock To Remain Range-Bound Until The Market Regains Confidence In AMD's Future Growth And Margin Trajectory"

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. The initial trickle of cautiousness around AMD on Wall Street is increasingly turning into a near-consensus view, spurred by increased competition from Arm-based processors and a slower-than-expected growth trajectory for the company's data center GPUs. To wit, Goldman Sachs analyst Toshiya Hari has just penned a fresh note on AMD, adopting a markedly cautious tone in relation to the stock's near-term prospects. While Goldman Sachs remains "constructive on AMD's ability to take share from Intel in x86-based compute across PCs and traditional servers," it is "increasingly concerned" that the ongoing ingress of Arm-based custom CPUs would reduce the company's stock multiple, "weigh on AMD's revenue growth relative to peers, and exert upward pressure on AMD's operating expenses." Elsewhere, Hari notes with concern AMD's relative underperformance, one that has seen the stock notch gains of just around 50 percent since the 04th of November 2020 - when the stock was added to Goldman Sachs' Buy List - while the S&P 500 has recorded gains of 72 percent over the same timeframe. According to the analyst, "this underperformance stems from weakness in PC and traditional end-demand, as well as slower-than-expected growth in Data Center GPUs." Hari goes on to note: "We now expect the stock to remain range-bound until the market regains confidence in AMD's future growth and margin trajectory." As a result, Goldman Sachs has downgraded AMD to a neutral rating and lowered its price target for the stock from $175 to $129, implying minimal upside potential relative to AMD's current stock price. Of course, Goldman Sachs' downgrade of the chipmaker comes within days of a similar action by HSBC. As we noted earlier this week, the iconic British bank has slashed its target for AMD's share price by 45 percent to $110 from an earlier target of $200. HSBC believes "AMD's AI GPU roadmap is less competitive than previously anticipated, limiting its penetration into the AI GPU market." Wolfe Research noted in December 2024 that "AMD won't be in a position to guide AI for CY25 - which will in itself drive concerns." Additionally, Bank of America (BofA) also recently flagged the rise of Arm-based vendors as a key concern for AMD's CPU market share, especially as the penetration of Arm-based server CPUs reached 7 percent in Q3'24 "vs. <5% in 2023 and ~1% in 2022."

A Major Global Bank Goes Bearish On AMD: "We Now Think AMD's AI GPU Roadmap Is Less Competitive Than Previously Anticipated"

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Given Intel's myriad of woes, many investors expected AMD to rapidly capitalize on its processor-driven momentum to start putting up some much-needed effective competition against NVIDIA in the AI GPU sphere. That eventuality, however, has yet to materialize, leading to an ephemeral disillusionment of sorts and prompting a major global bank to now go outright bearish on the stock's near-term prospects. To wit, HSBC - which was the 07th largest bank by assets in a global categorization by S&P in 2024 - has now slashed its target for AMD's share price by 45 percent to $110 from an earlier target of $200, implying a further downside of ~11 percent from the chipmaker's current share price. While noting the significant correction in AMD's share price that has already taken place, with the stock correcting by "24% in the past three months (versus -12% for the PHLX Semiconductor index)," HSBC analyst Frank Lee believes "further downside [for the stock] remains." Lee thinks "AMD's AI GPU roadmap is less competitive than previously anticipated, limiting its penetration into the AI GPU market." Consequently, the bank sees reduced momentum for AMD in this stock price-critical arena: "Specifically, we see downside to its 1H25 AI GPU momentum due to lukewarm demand for the MI325 GPU, as lower-spec HBM3e memory is expected, given Samsung's ongoing struggles with ramping up its higher-spec HBM3e." Lee does concede that AMD is slated to launch its new MI350 GPU in the second half of 2025, but notes that the chipmaker "likely won't have an AI rack solution to compete with Nvidia's NVL rack platform until late 2025 or early 2026, when we expect the MI400 to launch." HSBC's latest note on AMD aligns with a growing chorus of downbeat commentaries that are beginning to populate Wall Street. For instance, Wolfe Research noted in December 2024 that "AMD won't be in a position to guide AI for CY25 - which will in itself drive concerns." Additionally, Bank of America (BofA) also recently flagged the rise of Arm-based vendors as a key concern for AMD's CPU market share, especially as the penetration of Arm-based server CPUs reached 7 percent in Q3'24 "vs. <5% in 2023 and ~1% in 2022."

HSBC double downgrades AMD, says chipmaker will fall due to strong AI competition

It will be a "bumpy ride" for Advanced Micro Devices investors due to strong competition in the artificial intelligence space, according to HSBC. The bank downgraded the semiconductor stock to reduce from buy and lowered its price target to $110 per share from $200. HSBC's forecast implies a roughly 13% pullback from Tuesday's close. Analyst Frank Lee said increased competition for graphic processing units, from companies including Nvidia, Marvell and Broadcom will pressure AMD -- even after shares have dropped 26% over the past three months. GPUs are key components for powering AI programs and systems. AMD YTD mountain AMD stock. "We see additional downside as we now believe its AI GPU roadmap is less competitive than we previously thought. Hence, we believe AMD wouldn't be able to penetrate the AI GPU market as much as we had earlier anticipated. In particular, we see downside to its 1H25e AI GPU momentum given lukewarm demand for its new MI325 GPU, as we expect to see lower spec HBM3e memory in MI325 due to Samsung's ongoing struggles with ramping up its higher spec HBM3e," Lee said. Further adding to HSBC's pessimistic view on AMD is its view that the company's momentum outside of AI will be lackluster, Lee noted. "We expect client revenue to grow 12% [year over year] in FY25e, higher than overall FY25e PC notebook y-o-y unit growth of 4%. However, this still signifies a significant deceleration vs 44% client revenue y-o-y growth in FY24e," Lee said. AMD shares fell 2% following the downgrade. To be sure, most analysts are positive on the stock. LSEG data shows 43 of 54 analysts covering the chipmaker have a buy or strong buy rating on it. The average price target also implies 43% upside.

AMD stock down as HSBC cuts rating on less competitive AI roadmap By Investing.com

Investing.com -- HSBC (LON:HSBA) analysts on Wednesday downgraded AMD (NASDAQ:AMD) stock to Reduce from Buy, and nearly halved their price target to $110 from $200, citing a less competitive AI GPU roadmap. The analysts believe that AMD's ability to penetrate the AI GPU market may be hindered by lukewarm demand for its new MI325 GPU and potential delays in competing with Nvidia (NASDAQ:NVDA)'s NVL rack platform. As a result, the team has lowered its forecast for AMD's AI GPU revenue in fiscal 2025 year (FY25) from $12.3 billion to $8.1 billion, which is significantly below the consensus estimate of $9.5 billion. "AMD's share price has corrected by 24% in the past three months but we believe there remains further downside," HSBC analyst Frank Lee said in a note. "We believe AMD wouldn't be able to penetrate the AI GPU market as much as we had earlier anticipated." AMD shares fell nearly 3% in the Wednesday premarket trade. The analysts expect AMD to launch its MI350 chip in the second half of 2025, in line with its roadmap. However, they believe AMD is unlikely to introduce an AI rack solution capable of competing with Nvidia's NVL rack platform until late 2025 or early 2026, coinciding with the anticipated launch of the MI400. HSBC's downgrade also reflects concerns over AMD's client momentum and limited upside for non-AI data center revenue in FY25. The firm expects AMD's client revenue to grow by 12% year-over-year in FY25, a deceleration from the 44% growth forecasted in FY24. In addition to the AI GPU segment, HSBC also lowered its traditional data center server revenue estimate by 5%. While AMD is expected to continue gaining market share in server CPUs, the overall server industry growth is projected to be muted, leading to slower data center revenue growth. HSBC's revised 2025 EPS estimate for AMD is now $4.71, a 28% reduction from previous estimates and 6% lower than consensus estimates. The new price target of $110 is based on a lower 2025 target price-to-earnings ratio of 23x, down from 30x, reflecting the anticipated slower AI GPU revenue growth and potential further downside to analyst estimates.

AMD Stock Slumps After Double Downgrade by HSBC on AI Revenue Concerns

AMD shares have lost about a quarter of their value over the past three months, and HSBC analysts said they believe "there remains further downside." Advanced Micro Devices (AMD) shares tumbled Wednesday after HSBC analysts gave the stock a double downgrade, citing concerns about the chipmaker's artificial intelligence (AI) revenue. HSBC dropped AMD's rating two levels, to "reduce" from "buy," and lowered its price target to $110 from $200. The AI chip company's shares have lost about 24% over the past three months going into Wednesday, with the analysts adding they believe "there remains further downside." AMD shares slid more than 4% intraday to $121.60. The analysts called AMD's AI chip roadmap "less competitive" than previously anticipated, pointing to soft demand for its MI325 graphics processing unit (GPU). A new MI350 chip is expected from AMD later this year, but the analysts added it could struggle to compete with AI chipmaking titan Nvidia's (NVDA) offerings. HSBC lowered its fiscal 2025 AI GPU revenue forecast for AMD to $8.1 billion from $12.3 billion, well below the $9.5 billion analyst consensus. AMD is expected to report 2024 fourth-quarter earnings in late January or early February, based on the timing of its results last year.

Why AMD Stock Is Sinking Today | The Motley Fool

AMD (AMD -4.23%) stock is losing ground in Wednesday's trading. The semiconductor company's share price was down 3.6% as of 11:45 a.m. ET and had been down as much as 5.2% earlier in the session. AMD stock is falling today on the heels of bearish coverage from HSBC. The firm issued a rare double downgrade for its rating on the stock and slashed its one-year price target. In a note published before the market opened this morning, HSBC downgraded its rating on AMD stock from buy to reduce. The firm's analysts also cut their one-year price target from $200 per share to $110 per share. As of this writing, the new price target suggests additional downside of 10%. While artificial intelligence (AI) has been a major component of the bull case for AMD stock, HSBC now thinks the company's competitive position in the space is weaker than previously conceived. The analysts think the chip specialist will have a harder time competing with Nvidia and gaining market share in the AI data center market that's currently the prize in the advanced processor space. Specifically, HSBC's analysts are forecasting relatively soft demand for AMD's new M1325 graphics processing unit (GPU). While AMD has plenty of long-term growth opportunities still on the table, catching up to Nvidia in the advanced GPU market will be no easy feat. Along those lines, HSBC's analysts expect the smaller chip company won't have a leading solution for AI rack servers that can compete with Nvidia's until late 2025 or early 2026. That could mean AMD's financial performance this year will wind up falling significantly short of Wall Street's expectations. In response to these dynamics, HSBC has lowered its forecast for the chip specialist's AI GPU from $12.3 billion to $8.1 billion. But while analysts have been turning markedly more bearish on AMD, recent sell-offs may be raising the stock's appeal as a contrarian play on the artificial intelligence market. The company's share price is now down roughly 42% from its high, and new product announcements or signs of solid momentum in the AI space could help kick off a rebound rally.

Why AMD Stock Fell 11.9% in December and Lost Rebound Gains in 2025 | The Motley Fool

Advanced Micro Devices (AMD -4.57%) stock saw significant sell-offs in December's trading. The semiconductor company's share price closed out the month down 11.9%, according to data from S&P Global Market Intelligence. With December's trading concluded, AMD stock closed out 2024 down roughly 18%. The chip specialist's share price fell in the final month of 2024 as analysts became more cautious about the stock and issued downward share-price and revenue-outlook targets. On Dec. 9, Bank of America published coverage of AMD, downgrading the stock's rating from buy to neutral. The bank also lowered its one-year price target on the stock from $180 per share to $155 per share. Then, Truist published a note lowering its price target on Dec. 16. The investment company cuts its one-year price forecast from $180 per share to $155 per share and maintained a hold rating on the stock. The next day, Wolfe Research published a a new report on the company and stated it expected AMD's 2025 revenue to come in roughly $3 billion below the average Wall Street estimate. According to Wolfe, AMD's progress in artificial intelligence (AI) appears to be weaker than anticipated. As a result, the investment firm expects the company will only record $7 billion in AI revenue this year. With these dynamics in mind, Wolfe's analysts see the company having trouble heading into its anticipated quarterly report this month. Finally, Morgan Stanley published a note maintaining an equal-weight rating on the stock on Dec. 20. The investment company lowered its one-year price target on the stock from $169 per share to $158 per share, citing the potential for tough competition from Nvidia to limit the company's growth opportunities in the AI space. After a month of double-digit sell-offs, AMD stock started the new year with some rebound trading momentum. The company's share price had been up roughly 4% heading into the start of trading on Jan. 8, but fresh bearish coverage and investor consideration of macroeconomic risk factors have wiped out those gains. The chip-specialist's stock is now roughly flat in 2025's trading. Before the market opened this morning, HSBC published new coverage on AMD and issued a rare double downgrade for its rating on the stock. The bank lowered its rating from buy to reduce and cut its one-year price target from $200 per share to $110 per share. HSBC's analysts cited AMD's lack of competitive strength against Nvidia as a key reason for the ratings downgrade and price cut. AMD is heading into 2025 with lowered expectations. Nvidia has continued to dominate the market for advanced processors for data centers, and some analysts are worried that AI won't become the powerful near-term catalyst for the business that had previously been expected. On the other hand, it's far too early to write off AMD -- and it's possible that recent pressures for the stock will help set the stage for an explosive comeback rally.