HSBC has downgraded Advanced Micro Devices (AMD) investors’ outlook due to intensified competition in the artificial intelligence (AI) sector. The bank reduced its rating from “buy” to “reduce” and slashed its price target from $200 to $110 per share, suggesting a potential 13% decline from recent prices. Analyst Frank Lee highlighted that AMD faces escalating competition for graphic processing units (GPUs) from companies like Nvidia, Marvell, and Broadcom, especially given the importance of GPUs in AI applications. Despite a 26% drop in AMD shares over the last three months, HSBC anticipates further challenges. Lee remarked that AMD’s AI GPU roadmap appears less competitive than previously thought, particularly concerning its new MI325 GPU, which is projected to experience weak demand due to Samsung’s difficulties with advanced memory production. Additionally, HSBC expects AMD’s growth outside of AI to slow significantly, forecasting only 12% growth in client revenue for FY25, a stark contrast to the 44% growth expected in FY24. Following the downgrade, AMD shares fell by 2%. Nevertheless, the majority of analysts covering the stock remain optimistic, with a majority rating it as a “buy” and an average price target suggesting significant upside potential.
