Advanced Micro Devices, Inc. (AMD) has been reiterated at a "Neutral" rating by BofA Global Research, with a revised price objective of $135, down from $155. This adjustment reflects a tempered outlook for AMD's AI GPU segment, now projected at $7.5 billion for CY25E, and a shift towards higher PC and gaming exposure. The report highlights AMD's consistent product execution in CPUs and GPUs, with notable CPU share gains against Intel. However, it acknowledges the challenges AMD faces in the AI GPU market, where it lags behind NVIDIA and custom ASICs are gaining traction.
The report is centered around AMD's Q4 2024 earnings, which showed a surprising strength in the PC segment offsetting data center weaknesses. AMD reported Q4 revenue of $7.7 billion, a 12% increase q/q and 24% y/y, with EPS of $1.09, slightly above BofA's estimate of $1.07. The data center segment, however, underperformed expectations, with GPU revenue falling short of forecasts.
BofA notes, "AMD has not (yet) managed to articulate how it can carve an important niche versus NVDA's dominance," highlighting the competitive pressures in the AI silicon market. Despite these challenges, AMD's client segment showed robust growth, driven by strong adoption of Ryzen AI 300 series CPUs.
AMD's current stock price is $106.89, down 10.55% from the previous close of $119.50.