AMD is struggling to keep up with Nvidia in the AI chip market. While Nvidia’s stock has surged 160%, AMD’s stock has dropped 25% since the end of 2023, reaching its lowest level since November.
Investors Worried Over AMD’s AI Plans
One of the biggest concerns for investors came during AMD’s latest earnings call, where CEO Lisa Su chose not to give clear guidance on AI chip revenue. This raised doubts about AMD’s ability to compete with Nvidia, which dominates 89% of the AI server GPU market, according to IDC.
Analysts like Ted Mortonson from Baird criticized AMD’s lack of a short-term growth catalyst, saying that big investors hoping for a strong 2025 AI strategy were left disappointed.
Even though AMD’s revenue was better than expected, Su’s comment that AI chip sales in early 2025 would be similar to late 2024 worried investors. Many expected stronger growth as demand for AI chips increases.
Citi and Other Analysts Cut AMD Outlook
Following the earnings call, Citi lowered its outlook on AMD, citing risks and lack of AI revenue guidance. Other firms, including Bank of America, HSBC, and Melius Research, also expressed concerns about AMD’s competitive position.
At the same time, competition is growing. Chinese firm DeepSeek has shown it can produce AI chips at a lower cost, adding more pressure on AMD to accelerate its AI growth.
Is AMD a Buying Opportunity?
Despite its struggles, AMD remains a major AI player. Tech giants like Alphabet and Amazon continue to spend billions on AI infrastructure, which could help AMD’s long-term growth.
Some analysts believe the stock’s drop may be an opportunity. AMD now trades at 23 times its earnings estimate, below its five-year average, and 35% below the average analyst price target.
Ted Mortonson called the post-earnings selloff an overreaction and said some investors see AMD as a less risky buy at current levels.
Will AMD recover and challenge Nvidia in the AI race? Investors will be watching closely in the coming months.
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