HSBC analysts delivered a blow to Advanced Micro Devices (AMD, Financial) On Wednesday, downgrading it from "Buy" to "Reduce" and cutting its price target from $200 to $110, or nearly in half. Due to this bearish sentiment, AMD's stock plunged by 5%. The downgrade stems from concerns over AMD's ability to compete effectively in the AI GPU market, especially against Nvidia (NVDA, Financial), which still dominates the sector.
HSBC analyst Frank Lee pointed to weak demand for AMD's MI325 GPU and the possibility of delays in bringing a competitive rack solution to the battle against Nvidia's NVL platform. HSBC cut its fiscal 2025 AI GPU revenue forecast for AMD by half, slashing its revenue expectation from $12.3 billion to $8.1 billion, well below a consensus of $9.5 billion.
"Despite a 24% correction in AMD's share price over the last three months, we still see downside," said Lee. They also noted concerns around AMD's slowed-down non-AI data center revenue growth and client momentum, forecasting that client revenue will be up just 12% year on year in fiscal 2025 versus 44 percent growth in fiscal 2024.
AMD's roadmap includes the MI350 GPU launch in late 2025, and HSBC doubts the company's AI offerings will match Nvidia until the MI400 platform launch, which it expects before the end of 2025 or early 2026.
