Advanced Micro Devices (AMD) is facing headwinds as Wolfe Research downgraded the semiconductor company from "outperform" to "performer," citing concerns over slower-than-expected growth in its data center GPU revenue. Analyst Chris Caso highlighted that the data center graphics processing unit business is projected to generate $7 billion in revenue for 2025, a significant drop from previous estimates of $10 billion. This adjustment reflects a more cautious outlook on AMD's ability to capture market share in the competitive GPU space, particularly as the company grapples with weak PC demand and gaming softness.
Wolfe Research's downgrade also involved the removal of its $210 price target for AMD, indicating a more conservative stance on the stock's potential upside. Despite these challenges, the upcoming launch of AMD's MI350 AI accelerator chip is seen as a potential catalyst for future growth. However, the immediate outlook remains clouded by the anticipated modest quarterly growth in 2025 and the absence of a recovery in the embedded segment during the first half of the year.
AMD shares are currently trading at $118.445, down 1.26% from the previous close of $119.96.