Shares of semiconductor company Advanced Macro Devices (AMD) have declined more than 34% over the past year, in contrast to the 98% rally in rival Nvidia’s (NVDA) stock. Investors are disappointed that AMD hasn’t been able to capture the artificial intelligence (AI)-induced demand to the extent that Nvidia has done. Ahead of AMD’s Q4 results on February 4, analysts are cautious about the company’s prospects and await updates on the company’s AI product roadmap.
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Analysts expect AMD’s Q4 2024 EPS to rise 40% year-over-year to $1.08. Revenue is pegged at $7.53 billion, reflecting a 22% increase compared to the prior-year quarter.
Analysts Have a Cautious Stance Ahead of AMD’s Q4 Results
Heading into Q4 results, analysts at three investment firms – HSBC, Wolfe Research, and Melius Research, downgraded AMD stock in January. Specifically, Melius Research analyst Ben Reitzes downgraded AMD stock to Hold from Buy and slashed the price target to $129 from $160.
Reitzes explained that his downgrade is not due to the recent DeepSeek jitters but owing to a more cautious stance on AMD’s x86 server and PC businesses and the overall long-term position of the chipmaker. He is concerned that Nvidia is going to increasingly compete with AMD in both these key markets with its Arm (ARM)-based CPUs (central processing units) that are optimized for accelerated PCs. Further, Wolfe Research analyst Chris Caso downgraded AMD stock, citing lower expectations for AMD’s data center GPU (graphic processing unit) revenue this year.
Meanwhile, KeyBanc analyst John Vinh reiterated a Buy rating on Advanced Micro Devices stock but lowered the price target to $150 from $220. Vinh noted that the demand for AMD’s MI325 GPUs has been disappointing, given modest performance improvements compared to the MI300 chips.
Vinh lowered his estimates to reflect slightly lower data center GPU revenues in 2025 due to a higher mix of lower ASP (average selling price) China SKUs (stock keeping units) and also reduced estimates for the Embedded business, which was expected to see a partial recovery in the first half of 2025. Despite the subdued AI outlook for AMD, Vinh continues to be bullish on the stock, as he thinks that the ongoing challenges are temporary. The company expects AMD to be more competitive with its MI355 chips in the second half of the year, with a more meaningful contribution expected in 2026.
Is AMD a Buy or Sell Now?
Overall, Wall Street is cautiously optimistic about Advanced Micro Devices stock, with a Moderate Buy consensus rating based on 14 Buys, eight Holds, and one Sell recommendation. The average AMD stock price target of $161.55 implies about 38% upside potential from current levels.
