What simply occurred? AMD has spent most of this 12 months benefiting from Intel’s struggles, however the Crimson Workforce took a blow yesterday when Financial institution of America downgraded its inventory from Purchase to Impartial. BofA Securities cited dangers together with competitors in an AI chip business dominated by Nvidia, in addition to weakening PC gross sales. The corporate’s share worth is down virtually 10% in comparison with every week in the past.
Financial institution of America analysts wrote that along with aggressive dangers in opposition to Nvidia within the AI market, cloud clients are displaying a rising choice for customized chips from Marvell Know-how and Broadcom, which is limiting AMD’s potential. to realize market share.
It was additionally famous that AMD’s largest cloud buyer, Amazon, has indicated a choice for different customized merchandise, which might once more limit AMD’s market share within the AI accelerator business.
“AMD’s portfolio stays greater than a 12 months behind Nvidia’s (which is accelerating) and lacks a aggressive networking portfolio (switching, optics),” stated BofA analyst Vivek Arya. “Long term, we proceed to see Nvidia with over 80% share in accelerators, customized chips between 10% and 15%, and the remaining shared by AMD and quite a lot of startups.”
Arya additionally warned that there might be a correction within the PC market within the first half of 2025, which might affect AMD. In line with Gartner, international PC shipments within the third quarter of 2024 totaled 62.9 million items, a lower of 1.3% from the identical interval in 2023. However Gartner believes PC demand will see stronger progress in 2025, when PC refresh will peak. high.
Arya lowered his ranking on AMD inventory and lowered his worth goal from $180 to $155. The corporate’s gross sales and earnings estimates have been additionally lowered. GPU income estimates for 2025 have been lowered considerably, from $8.9 billion to $8 billion, properly under the consensus estimate of $9.6 billion.
The analyst had excellent news for AMD. He famous that Lisa Su’s firm might benefit from the difficulties of Intel, which not too long ago ousted Pat Gelsinger. It is one thing we’re already seeing. In the course of the latest Black Friday occasion, virtually 90% of motherboards offered by German retailer Mindfactory got here from AMD, which additionally dominates Amazon’s US gross sales charts for each CPUs and mobos. What’s extra, the latest steam survey exhibits that AMD has achieved its highest person share within the CPU class, reaching virtually 36%.
