Advanced Micro Devices stock slid on Monday after a Wall Street analyst downgraded the chipmaker to neutral from buy on "downside risks" to 2025 expectations. Risks to AMD stock include competition in artificial intelligence chips and weakening personal computer sales, BofA Securities said.
BofA analyst Vivek Arya lowered his rating on AMD stock and cut his price target to 155 from 180. He also trimmed his sales and earnings estimates for the company.
On the stock market today, AMD stock fell 5.6% to close at 130.87.
In the AI chip market, AMD faces stiff competition from market leader Nvidia and custom-chip makers Broadcom and Marvell Technology, Arya said in a client note.
"AMD's pipeline remains 1 year-plus behind Nvidia's (which is accelerating) and lacks a competitive networking (switching, optics) portfolio," he said. "Longer term, we continue to see Nvidia at 80%-plus accelerator share, custom chips at 10-15%, with the remaining shared by AMD and a range of startups."
Also, a possible PC market correction in the first half of 2025 could weigh on AMD, he said. On the positive side, AMD could benefit from struggles at rival Intel, Arya said.
Last Wednesday, Mizuho Securities analyst Vijay Rakesh lowered his price target on AMD stock to 180 from 185 but kept his outperform rating. He said he was moderating his outlook for the first quarter and full year 2025 to be more in line with consensus estimates.
AMD stock ranks No. 13 out of 39 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. It has a mediocre IBD Composite Rating of 62 out of 99.
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