From Barchart: 2024-12-09 09:09:00

Advanced Micro Devices (AMD) shares dropped 2% after Bank of America downgraded the stock to Neutral from Buy, citing risks to its 2025 outlook. Price target lowered to $155 with earnings estimates cut by 6% and 8% for 2025/26, creating a substantial gap from consensus projections.

Competitive pressures in the AI sector, with NVIDIA and custom chip providers threatening AMD’s market share growth. Concerns over Amazon’s preference for custom solutions like Trainium, Marvell, and NVIDIA products, limiting demand for AMD’s offerings.

Bank of America projects AMD to only hold 4% of the $200 billion AI accelerator market by 2025, far behind NVIDIA’s dominant share of over 80%.

Potential correction in the PC processor market could challenge AMD’s growth trajectory despite a 40% surge in client PC sales in late 2024.

Bank of America acknowledges AMD’s strong execution and opportunities to gain market share in PC and server CPUs due to Intel’s restructuring issues. Partnerships with Microsoft, Meta, and Oracle seen as strategic positives.

Outlook tempered as AMD’s prospects in the AI sector are limited, reducing the likelihood of exceeding Street estimates.



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