Shares of Advanced Micro Devices (AMD, Financial) dipped 4% on Monday after Bank of America downgraded Advanced Micro Devices from Buy to Neutral, citing headwinds within the PC sector into 2025 and challenges within the AI accelerator market. In addition, AMD’s worth goal was minimize to $155 from $180, and the agency’s 2025 and 2026 EPS estimates had been additionally minimize by 6% and eight%, respectively, whereas preserving a 13% to 23% hole versus consensus.
The analysis observe emphasised growing aggressive pressures from NVIDIA (NVDA, Financial) Among customized chipmakers, firms like Marvell Technology (MRVL, Financial), and Broadcom (AVGO, Financial). A key issue is AMD’s restricted traction with main cloud suppliers. As Bank of America said, “Amazon (AMZN, Financial) strongly indicated its desire for various customized (Trainium/MRVL) and NVDA merchandise.” In 2025, solely 4% of the $200 billion AI accelerator market is predicted to be managed by AMD with NVIDIA having the dominant 80+% share.
Secondly, a market correction within the PC processor market was flagged by considerations over a possible market within the first half of 2025. A sturdy 40% half-on-half surge in AMD’s shopper PC gross sales in late 2024, which introduced its 12 months earnings estimate in line, is outwardly slowing, dragging on development, Bank of America warns.
Despite the downgrade, the agency acknowledged AMD’s alternatives to achieve market share amid Intel’s restructuring challenges and its sturdy partnerships with Microsoft (MSFT, Financial) and Meta (META, Financial), But it stays tempered by restricted upside potential in AI.
This article first appeared on GuruFocus.
