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On Wednesday, Truist Securities revised its price target for Advanced Micro Devices (NASDAQ:AMD) shares, bringing it down to $111 from the previous $130, while maintaining a Hold rating on the stock. The adjustment follows AMD’s first-quarter results, which Truist’s analyst found to be generally positive but overshadowed by several complex factors affecting the company’s outlook. According to InvestingPro data, AMD’s stock has seen significant volatility, with a 34% decline over the past six months despite maintaining strong fundamentals and a robust financial health score.
The analyst pointed out that AMD’s decision to exit the China market is expected to lead to a decrease in Datacenter Accelerator revenues in the second and third quarters. Additionally, an inventory write-down is anticipated in the second quarter. On a more positive note, the Client segment is predicted to show considerably better performance due to a richer product mix. The company maintains strong financial flexibility with a current ratio of 2.62 and operates with minimal debt, as revealed by InvestingPro analysis, which offers 12 more additional insights about AMD’s financial position.
The second half of 2025 is set to see the ramp-up of AMD’s MI350, with the MI400 expected to follow in the calendar year 2026. Despite these developments, Truist Securities expressed concerns about AMD’s ability to effectively compete as it introduces these new products. The firm’s model and valuation for AMD appear constructive, but there is a lack of conviction that AMD can ramp up these offerings competitively.
Truist Securities also adjusted its earnings per share (EPS) forecast for AMD for the calendar year 2026, reducing it slightly from $5.67 to $5.54. The new price target of $111 is based on a 20 times multiple of the projected CY26 EPS, which represents a 5 times discount compared to the 25 times multiple assigned to AMD’s data center peers.
In other recent news, AMD reported impressive financial results for the recent quarter, with earnings of $0.96 per share on revenue of $7.44 billion, exceeding both Northland’s and consensus estimates. The company’s non-GAAP gross margin was slightly higher than projections at 53.7%, and its Data Center segment generated $3.7 billion in revenue, surpassing estimates. AMD’s Client and Gaming sector also outperformed expectations, with gaming revenue reaching $647 million. Analysts have responded to these developments with mixed adjustments to their ratings and price targets for AMD. Northland reduced its price target from $175 to $132, maintaining an Outperform rating, while Stifel kept a Buy rating with a $132 target. Evercore ISI maintained an Outperform rating with a $126 target, citing AMD’s strong performance in the Data Center GPU business. KeyBanc continued to rate AMD as Sector Weight, acknowledging the company’s robust first-quarter results. Meanwhile, Jefferies lowered its price target to $100, expressing concerns over AMD’s AI growth metrics despite maintaining a Hold rating. These recent developments reflect AMD’s current market position and the varied analyst perspectives on its future prospects.
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