AMD’s Strategic Moves and Market Challenges Lead to Hold Rating

Citi analyst Christopher Danely has maintained their neutral stance on AMD stock, giving a Hold rating on May 15.

Christopher Danely has given his Hold rating due to a combination of factors surrounding AMD’s recent strategic moves. AMD’s decision to divest the manufacturing segment of ZT Systems to Sanmina for $3.0 billion, while retaining the engineering team, is a significant factor. This move is aimed at enhancing AMD’s competitive position against Nvidia in the data center GPU market by leveraging the expertise of the 1,200 engineers acquired.
Despite this strategic acquisition, the expected sale price of ZT Systems was lower than anticipated, which may impact AMD’s financial outlook. Additionally, the Hold rating reflects concerns over slowing growth in the AI sector and challenges in achieving margin leverage. These elements contribute to maintaining a cautious stance on AMD’s stock, with a target price set at $100, slightly above its historical average.