AMD stock drops 5% due to competition and market concerns, but long-term performance remains positive.

From Nasdaq: 2025-02-02 22:13:47

AMD stock has dropped nearly 5% in the past five trading days and is down 19% since the beginning of 2024. This decline comes as the S&P 500 has seen a 27% increase since early 2024. Factors contributing to the sell-off include the launch of China’s resource-light AI model, DeepSeek, and Intel’s price cuts on server chips.

DeepSeek’s innovative software-driven approach to AI modeling could reduce the need for GPUs, potentially impacting AMD’s position in the GPU market. Additionally, Intel’s new Granite Rapids server chips offer increased performance at lower prices, posing a competitive threat to AMD. Despite recent volatility, AMD’s long-term performance has been positive compared to the S&P 500.

While Nvidia has dominated the AI accelerator market, DeepSeek’s lower computing power requirements may open opportunities for other players like AMD. With expertise in both CPUs and GPUs, AMD stands to benefit from the evolving computer hardware landscape. A $160 per share valuation for AMD suggests a potential 35% upside, given the company’s growth prospects and position in the AI market.

In terms of returns, AMD has seen a 2% decline in January 2025, down 19% since the start of 2024, but with a total return of 948% from 2017 to 2025. In comparison, the S&P 500 has seen a 3% increase in January 2025, up 27% since the start of 2024, with a total return of 171% over the same period.



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