Advanced Micro Devices, Inc. (NASDAQ: AMD) has faced analyst downgrades, resulting in its stock trading at recent lows, which some consider a buying opportunity. The company is slated to report Q4 2024 results soon, with focus on its 2025 AI GPU guidance likely to be pivotal.
AMD faces analyst downgrades as market awaits AI GPU guidance
AMD ended 2024 on a lower note, with several analysts downgrading the stock recently following a disappointing CES lineup. Goldman Sachs lowered AMD to a Neutral rating and adjusted the price target from $175 to $129, while HSBC cut its price target from $200 to $110, citing challenges in penetrating the AI GPU market and concerns over memory supply from Samsung affecting the MI325 GPU.
Rosenblatt has been notably bullish on AMD, forecasting substantial growth in 2026 driven by the MI350, with a price target of $250, contrasting the negative sentiment that currently surrounds the stock. At the UBS Global Technology conference, Data Center EVP Forrest Norrod articulated AMD’s goal to secure a 20% market share in the AI GPU space, emphasizing the need to be significant in the ecosystem.
AMD pauses RDNA 4 launch to outsmart Nvidia
Growth outlook for 2025
AMD is expected to return to over 20% growth in 2025, with forecasts of $7.5 billion in revenues for Q4 2024, representing year-over-year growth of 22%. The critical focus will be on CEO Lisa Su’s guidance for AI GPU sales in 2025, which the market anticipates could reach between $8 to $10 billion, facilitating potential stock recovery.
In 2024, AMD shipped 327,000 MI300X GPUs, with major customers including Meta (173,000), Microsoft (96,000), and Oracle (38,000). As the AI GPU sales target for 2024 is only $5 billion, the company aims to leverage its existing relationships with significant server spenders like Meta and Microsoft.
AMD’s stock trades at 23 times earnings per share (EPS) targets for 2025, which are estimated to exceed $5. The broader revenue forecast is approximately $32 billion with projected growth of 26%. AMD continues to work with multiple memory vendors to alleviate any supply challenges for the MI325.
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Featured image credit: Kerem Gülen/Ideogram
