Advanced Micro Devices (AMD, Financial) just can’t catch a break. After getting slammed in the recent AI chip selloff, the stock took another hit—this time from Melius Research’s Ben Reitzes, who downgraded it to Hold from Buy. His reason? It’s not just the DeepSeek panic. The real problem is Nvidia (NVDA, Financial) coming straight for AMD’s turf in both AI and PC chips. Nvidia’s new Arm-based CPUs and AI-powered desktops could shake up the traditional PC market, putting AMD in a tough spot. Reitzes also slashed his price target from $160 to $129, signaling that AMD’s premium valuation might not hold up much longer.
And the competition is only heating up. Nvidia’s latest play, Project Digits, introduces its GB10 Grace Blackwell Superchip, a direct challenge to AMD and Intel (INTC, Financial) in high-performance computing. If Nvidia succeeds in pushing its integrated AI solutions, AMD’s CPU growth could slow even further—Reitzes now expects just 3% growth in 2027, a steep cut from his previous 9% forecast. Even AMD’s once-dominant server market is looking shaky, with cloud giants like Amazon turning to custom chips like Graviton, and Qualcomm (QCOM) eyeing the space. If that trend continues, AMD’s stronghold in data centers could erode faster than expected.
Still, AMD isn’t out of the game. Its Turin server chip is making strides, and it remains a key player in AI GPUs. But expectations are shifting—analysts have revised their 2025 data-center GPU revenue estimates from $10 billion to $7 billion, a sign that Nvidia’s grip on the market is tightening. With competition ramping up on all fronts, investors are left wondering: Can AMD defend its ground, or is it in for a long battle to stay relevant?
