On Wednesday, HSBC analysts revised their outlook on AMD (NASDAQ:AMD) stock, downgrading it from Buy to Reduce and significantly adjusting the price target to $110 from the previous $200. The decision comes after AMD’s share price experienced a 24% drop over the past three months, which contrasts with a 12% decline in the PHLX Semiconductor index for the same period.
According to InvestingPro data, AMD currently commands a market capitalization of $206.6 billion, with analysts maintaining a consensus "Buy" recommendation and a high price target of $250.
HSBC’s analysis indicates a potential further decline in AMD’s stock value. The firm’s less optimistic view is based on their belief that AMD’s artificial intelligence (AI) graphics processing unit (GPU) roadmap is not as competitive as initially assessed.
This perceived lack of competitiveness is expected to hinder AMD’s penetration into the AI GPU market. InvestingPro data shows AMD maintains strong financial health with a current ratio of 2.5 and operates with moderate debt levels, suggesting resilience despite market challenges.
AMD’s recent launch of the MI325 GPU has received a lukewarm response, which HSBC attributes to anticipated lower-spec HBM3e memory due to Samsung (KS:005930)’s production challenges. These difficulties with Samsung’s higher-spec HBM3e memory ramp-up are seen as a limiting factor for the MI325’s performance.
The report also touches on future product launches, noting that while AMD is on track to release its MI350 chip in the second half of 2025, the company is not expected to offer an AI rack solution that can compete with Nvidia (NASDAQ:NVDA)’s NVL rack platform until late 2025 or early 2026. This timeline is aligned with the anticipated launch of AMD’s MI400.
HSBC’s revised stance on AMD reflects concerns about the company’s short-term prospects in the highly competitive AI GPU segment. The analysis suggests that AMD may face challenges in maintaining its market position against rivals, particularly given the current technology and market dynamics.
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In other recent news, Advanced Micro Devices (NASDAQ:AMD) and hedge fund LuminArx Capital Management have jointly invested $333 million in the cloud startup Vultr, reflecting a growing demand for artificial intelligence (AI) infrastructure. This funding will allow Vultr to acquire more graphics processing units (GPUs) for powering AI models.
Additionally, Northland analysts maintained a positive outlook on AMD, expecting the company to continue gaining market share in various segments including AI GPUs, server CPUs, and PC clients. They predict AMD’s AI revenue for CY25 to reach $9.5 billion, up from $5.2 billion.
In the meantime, KeyBanc Capital Markets maintained its Overweight rating on AMD with a price target of $220. They also maintained an Overweight rating on ARM with a price target of $195, while Intel’s Sector Weight rating was retained, with a fair value of $19 based on 2025 earnings per share estimate.
In a recent development, a plan by the Biden administration to limit the number of AI chips that companies can install in computing facilities in certain countries was challenged by two U.S. senators. They expressed concerns that the proposed restrictions could impede the sale of U.S. technology overseas and potentially drive foreign buyers towards Chinese competitors like Huawei.
Finally, Wolfe Research expressed skepticism about Intel Corporation (NASDAQ:INTC)’s ability to maintain its status as an integrated device manufacturer (IDM), citing intensifying competition and market conditions.
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