Cathie Wood Dumps More AMD Stock — Here’s What May Be Behind It

Advanced Micro Devices (NASDAQ:AMD) may have once gained the nickname of Advanced Money Destroyer, given the stock’s reputation for lagging behind its peers in the AI game, but that is definitely no longer the case.

The stock has been on a tear over the past year, and any fears it was likely heading for a pullback following the release of its Q1 results proved to be wildly overstated. The shares gained 19% in the subsequent session, notching new highs after the chipmaker handily beat expectations and offered plenty of bullish commentary on its future.

Yet, while Wall Street and retail investors have been piling into the Lisa Su-led chipmaker, one prominent investor has been moving in the opposite direction. Cathie Wood, through several Ark Invest ETFs, has sold 275,788 AMD shares so far this month, a position that would now be worth about $113 million.

Considering the scale of AMD’s rally, with shares up 307% over the past year, it would not be surprising if Cathie Wood believes expectations surrounding the stock have become difficult to live up to. That thinking lines up with the more cautious stance taken by Morgan Stanley analyst Joseph Moore.

Given how much the shares had already climbed ahead of the earnings release, the market’s reaction surprised Moore somewhat, and he puts that down to “limitless enthusiasm” for CPUs right now. Nevertheless, the 5-star analyst does applaud the company for its execution, saying he believes in the AMD CPU story.

But on the main theme, Moore strikes a cautious tone. “AI remains less certain; we are excited to see what AMD can bring with its rack scale products, but pencilling in CoWoS #s as revenue seems overly optimistic, and our customer checks lean optimistic but ultimately are a little bit inconclusive, as customers need to test the racks to gauge their enthusiasm,” said Moore, who ranks among the top 2% of Street analysts.

The analyst continues to believe the AI hardware market remains in a strong investment cycle, which should provide support for AMD. However, competition is intense, with both Nvidia and ASIC vendors advancing rapidly, so AMD will need a very strong MI400 launch next year to solidify its standing.

“AMD’s position in all of its other markets remains strong, given Intel’s disarray, but AI remains uncertain,” Moore summed up.

Accordingly, Moore remains on the sidelines with an Equal-weight (i.e., Neutral) rating, but bumps his price target from $360 to $410, suggesting the shares will stay rangebound for the time being. (To watch Moore’s track record, click here)

 7 other analysts join Moore on the fence, but with an additional 27 Buys, AMD stock claims a Strong Buy consensus rating. At $440.45, the average price target makes room for an 8% returns in the year ahead. (See AMD stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.