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On Wednesday, TD Cowen maintained its Buy rating on shares of AMD (NASDAQ:AMD) but reduced the price target from $135.00 to $110.00. Joshua Buchalter, an analyst at TD Cowen, cited a combination of company-specific challenges and broader negative market sentiment affecting the compute sector. The stock, currently trading at $81.83, has experienced significant pressure, falling over 24% in the past week alone. Additionally, concerns over tariffs have also been influencing the stock's performance. According to InvestingPro data, AMD's RSI suggests the stock is in oversold territory.
Buchalter's analysis acknowledged AMD's difficulties, particularly with its data center (DC) GPU forecasts for the first half of 2025, which have led to a recalibration of expectations. Despite these challenges, the analyst expressed optimism about AMD's upcoming mid-year launch of the MI355X, which could potentially drive the stock's momentum. The company maintains strong fundamentals with a healthy current ratio of 2.62 and revenue growth of 13.69% over the last twelve months.
The report also highlighted the sustained progress in AMD's Client segment, although it noted that the stock has not reflected this due to the intense market focus on the Instinct product line. Buchalter pointed out that at approximately 13 times the estimated 2026 earnings, AMD's stock presents attractive optionality if it gains traction in the DC-GPU market.
However, the analysis included a cautionary note regarding macroeconomic conditions. Buchalter suggested that if the current macro environment persists, it could necessitate further adjustments to estimates. Despite this, the firm adopted a "wait and see" approach, opting for limited changes to its models at this stage. The revised price target reflects the analyst's current assessment of the company's prospects amid these various factors.
In other recent news, Advanced Micro Devices, Inc. (AMD) announced that Google (NASDAQ:GOOGL) Cloud's new virtual machines, C4D and H4D, are now equipped with AMD's 5th Gen EPYC processors. These new instances are designed to enhance performance for tasks such as data analytics and artificial intelligence, with internal testing showing significant improvements in throughput. AMD also revealed plans for an AI-focused event, "Advancing AI 2025," set for June 12, 2025, where it will introduce its latest Instinct GPUs and discuss AI strategies. Meanwhile, KeyBanc Capital Markets downgraded AMD's stock from Overweight to Sector Weight, citing concerns over AMD's AI business in China and increased competition from Intel (NASDAQ:INTC). Despite this, KeyBanc raised its revenue and EPS projections for AMD due to strong demand for certain products, though they noted potential pressure on gross margins. Additionally, the semiconductor industry faces uncertainty following President Trump's new tariff plans, with analysts highlighting potential impacts on supply chains and demand. While semiconductors are temporarily spared from reciprocal tariffs, products incorporating them may face higher duties. Investors will be watching these developments closely as AMD navigates these challenges and opportunities.
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