Lynx Equity cuts AMD stock rating on expected guidance drop

On Tuesday, Lynx Equity expressed concerns over Advanced Micro Devices, Inc. (NASDAQ:AMD) forecasting a potential decline in the company’s performance in the second half of the year. The firm predicts that AMD’s guidance and commentary for the latter half of the year will likely be less optimistic than expected, which has not yet been reflected in the current stock price of $100.59. The stock has already seen a significant decline, down about 31% over the past six months. Lynx Equity’s stance comes amid a general negative sentiment towards the sector, following similar issues faced by Intel Corporation (NASDAQ:INTC).InvestingPro analysis shows AMD maintains a "GOOD" overall financial health score, with particularly strong metrics in cash flow management. Investors seeking deeper insights into AMD’s market position can access comprehensive analysis through InvestingPro’s detailed research reports.

According to Lynx Equity, the decline in INTC’s performance, which was initially attributed to market share loss to AMD, also included impacts from tariff-related supply chain weaknesses. It is anticipated that AMD will experience similar challenges. The analysts also foresee specific issues within AMD’s AI segment due to new licensing requirements, which could affect both the company’s revenue and gross margin. The extent of this impact is still uncertain.

Three months prior, Lynx Equity had some optimism regarding AMD’s AI business, particularly with the potential demand for its DeepSeek technology. However, the recent licensing constraints have dampened such hopes. Consequently, the firm has adjusted its outlook for AMD’s stock, no longer seeing a trajectory towards the previously estimated $130 price target. Current analyst consensus shows a wide range of expectations, with price targets spanning from $70 to $200, reflecting the market’s uncertainty about AMD’s future performance.For investors seeking to navigate this volatility, InvestingPro offers exclusive insights and valuation metrics, including Fair Value estimates and detailed financial health indicators that help identify investment opportunities in the semiconductor sector.

Lynx Equity has revised its model for AMD’s calendar year 2025 financials to $29.1 billion in revenue with a 13% increase, and earnings per share (EPS) of $3.6. This contrasts with the consensus estimates of $31 billion in revenue, up 20%, and an EPS of $4.4. Applying a 25x multiple to the EPS, Lynx Equity now sees a potential path to a $90 price target for AMD stock.

Despite these challenges, AMD has taken steps to bolster its financial position. The company recently raised liquidity by issuing debt before the escalation of tariff-related costs and is expected to further improve its liquidity by approximately $5 billion through the upcoming sale of the server assembly unit acquired with ZT Systems. This move is seen as providing a financial buffer for AMD during a period when global supply chain liquidity is under pressure due to tariff disputes. The company’s current ratio of 2.62 and moderate debt levels demonstrate strong liquidity management, while maintaining a healthy gross profit margin of 53%.

In other recent news, Advanced Micro Devices, Inc. (AMD) has been the focus of several significant developments. Seaport Global Securities initiated coverage on AMD with a Buy rating and a price target of $110, highlighting the company’s consistent market performance and strategic execution. Meanwhile, Bernstein analysts maintained a Market Perform rating but reduced the price target to $95, citing challenges in the PC market and new licensing requirements in China. JPM analysts have noted a potential $1.5 to $1.8 billion revenue impact for AMD, alongside an $800 million inventory charge, which could affect the company’s earnings per share by approximately 10%.

Additionally, AMD has announced plans to showcase its advancements in artificial intelligence at Computex 2025, emphasizing its role in AI across gaming, personal computers, and professional workloads. The company has also collaborated with Stable Diffusion to optimize AI models for AMD Radeon GPUs and Ryzen AI APUs, enhancing performance without compromising quality. This collaboration aims to integrate these models into various production pipelines, making workflows more efficient. These recent developments reflect AMD’s ongoing efforts to expand its technological capabilities and market presence.

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