Despite rising demand for AI chips and strong financial results, AMD stock has tumbled nearly 50% since early 2024.
The company reported a 14% revenue increase and a 25% jump in earnings per share for the year, but investors remain unimpressed.
One key issue is AMD’s AI business. The company generated $5 billion in AI revenue in 2024, but its 2025 outlook of “strong double-digit growth” seems underwhelming.
In comparison, Nvidia earned over $30 billion from AI chips in just one quarter, highlighting AMD’s struggle to gain ground.
Beyond AI, AMD’s gaming and embedded segments have also been weak. Gaming revenue plunged 58%, and embedded revenue fell 33% due to excess inventory.
The Xilinx acquisition—which cost AMD $35 billion—is also under scrutiny, as its earnings contributions have been underwhelming.
At a P/E ratio of 33, AMD isn’t overpriced, but slowing growth in its CPU businesses and concerns over AI demand make it a risky bet.
While long-term prospects remain solid, AMD could face more short-term challenges in 2025.
