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On Wednesday, BofA Securities made adjustments to its outlook on AMD (NASDAQ:AMD) shares, lowering the price target to $135 from the previous $155, while keeping a Neutral stance on the company. According to InvestingPro data, AMD currently trades at $119.50, with analyst targets ranging from $110 to $250, suggesting significant variance in market expectations. The decision comes as AMD continues to compete in a market dominated by NVDA and the rising significance of custom ASIC chips in AI technology.
Vivek Arya, an analyst at BofA Securities, highlighted that AMD delivered a fourth quarter performance that aligned with market expectations, with strong PC sales compensating for weaker data center results. The company’s first-quarter sales projections are slightly more optimistic, driven by consumer PC and gaming sectors, differing from INTC’s more subdued forecast affected by customer pull-ins related to tariffs.
Despite the competitive landscape, AMD has not yet outlined a clear strategy for distinguishing itself in the AI silicon space, where NVDA currently leads. Consequently, BofA has adjusted its expectations for AMD’s AI GPU revenue, now estimating $7.5 billion by calendar year 2025, a slight decrease from the previous $8 billion forecast. With a market capitalization of $194 billion and revenue growth of 9.88% in the last twelve months, AMD maintains its position as a prominent player in the semiconductor industry. InvestingPro subscribers can access 15+ additional insights about AMD’s competitive position and growth metrics.
AMD refrained from providing specific guidance for its AI GPU segment for the year but indicated that it anticipates a flat first half, with prospects for growth in the latter half owing to the rollout of its new MI350 products. BofA has kept its projections for AMD’s pro forma earnings per share for calendar years 2025 and 2026 steady at $4.43 and $5.51, respectively. The revised price objective reflects a change in the sales mix, with a shift towards lower-value consumer segments from the data center, and applies a 24x price-to-earnings ratio, down from the previous 28x but still within the historical range of 13x to 39x.
The adjustment in AMD’s price target and the continuation of a Neutral rating suggest a cautious outlook from BofA Securities, acknowledging both the company’s near-term strengths in the consumer sector and the challenges it faces in defining its role in the competitive AI market. Based on InvestingPro’s comprehensive analysis, AMD currently shows a ’FAIR’ overall financial health score, with particularly strong cash flow metrics. Investors seeking detailed valuation analysis and growth projections can access AMD’s full Pro Research Report, part of InvestingPro’s coverage of 1,400+ US stocks.
In other recent news, AMD has been the subject of various analyst reviews and developments. Northland maintains an outperform rating on AMD stock with a price target of $175, highlighting the potential of AMD’s open-source approach and its capability to challenge established competitors in the server market. However, KeyBanc Capital Markets revised its outlook on AMD, lowering its price target to $150, due to underwhelming demand for AMD’s MI325 and a less than favorable AI outlook for the company in the short term. Despite this, KeyBanc maintains an Overweight rating on AMD, expecting a recovery with the release of the MI355 in the second half of the year.
Goldman Sachs also weighed in, downgrading AMD from Buy to Neutral and reducing the price target from $175 to $129. The downgrade was prompted by concerns over the potential impact of Arm-based custom CPUs and increased competition in accelerated computing on AMD’s revenue growth and operating expenses.
In a positive development, AMD announced a strategic collaboration and a $20 million investment in Absci Corporation, aiming to enhance Absci’s AI-driven drug discovery capabilities using AMD’s Instinct accelerators and ROCm software. This partnership is expected to lead to significant reductions in infrastructure costs and faster innovation cycles for Absci. These recent developments provide a snapshot of the evolving narrative around AMD.
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