AMD (NASDAQ:AMD) was cut to Market Perform by Northland Capital on Monday, with the firm removing its price target for the stock, saying AI is not as big as investors are thinking.
"It's really big, just not as big as investors are thinking," analysts at Northland Capital said in a research note.
"While chip prices are cyclically driven by supply and demand, they are flat over the long term," the analysts noted. "We also believe that AI demand in CY23 was overstated due to double ordering."
"We forecast AI chip revenue of $125B in CY27 and model AMD with $16B in AI revenue and a 13% market share," they added.
Northland believes AMD's shares reflect much higher AI revenue in CY27 than their forecast. With AMD's shares $6 above the firm's previous price target and significantly above its upgrade from 7/5/23 before NVDA's blowout quarter, the firm decided to downgrade the stock.