Advanced Micro Devices (AMD) faced a downgrade from Melius Research on January 28th, as analyst Ben Reitzes shifted his rating to a Hold, citing intensifying competition from Nvidia. Reitzes expressed concerns over Nvidia's advancements with its Arm-based CPUs, which are optimized for accelerated PCs and pose a significant threat to AMD's market share in the x86 server and PC markets. The analyst highlighted the potential for Nvidia's custom CPUs and accelerators to further erode AMD's position, despite the current success of AMD's Turin chip. This competitive pressure has led to a downward revision of estimates and a reduced price target of $129, down from a previous target of $160.
The downgrade reflects a more cautious outlook for AMD, as Nvidia's strategic moves are expected to disrupt both the PC and server markets, potentially weakening AMD and Intel's CPU profit pools in the long term. This sentiment was echoed by Bernstein, which maintained a Hold rating with a $150 price target, underscoring the challenges AMD faces in maintaining its competitive edge.
AMD's stock closed at $114.17 on January 28th, down 0.73% from the previous close of $115.01, with a slight additional decline of 0.05% in after-hours trading.