Advanced Micro Devices (AMD, Financial) was downgraded to Hold from Buy by Melius Research on Tuesday, citing a weaker outlook for x86 servers and PCs rather than concerns over DeepSeek. Analysts believe Nvidia (NASDAQ:NVDA) is poised to take a larger share of these markets.
"Nvidia is increasingly 'coming for them' with Arm-based CPUs optimized for accelerated PCs," Melius analysts, led by Ben Reitzes, wrote in a note. They also warned that custom CPUs and Nvidia processors could further erode AMD's presence in the x86 server market, despite the current success of AMD's Turin chip.
Melius lowered its AMD price target to $129 from $160 and noted that the rise of AI-optimized PCs—driven by Nvidia's Project DIGITS, a $3,000 AI personal supercomputer—could accelerate demand for Nvidia-based solutions over AMD.
Project DIGITS targets a $15 billion workstation market, but analysts suggest its real potential lies in a larger $220 billion PC hardware market, spanning desktops and notebooks.
