Advanced Micro Devices (AMD) stock has declined about 10% over the past month. Nonetheless, AMD shares have recovered strongly from the lows seen in April and are up 29% year-to-date, driven by renewed optimism about the semiconductor company capturing the robust demand for artificial intelligence (AI) chips through its new launches. While most analysts are bullish on AMD’s prospects and see the recent pullback as a buying opportunity, some are concerned about the growing competition in the AI chips market and margin pressures. Currently, Wall Street’s consensus rating indicates cautious optimism on AMD stock.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Analysts’ Views on Advanced Micro Devices Stock
At the Advancing AI event in June, AMD highlighted its Instinct MI350 Series GPUs (graphics processing units), Instinct MI400 chips set to be launched next year, and the Helios rack-scale AI platform. The company’s new launches addressed investors’ concerns about AMD significantly lagging behind Nvidia (NVDA) in the AI chip race.
While sentiment for AMD stock has improved compared to the selloff seen earlier this year, some analysts are worried about the impact of chip export restrictions and margin pressures. Moreover, Broadcom’s (AVGO) solid Q3 FY25 results and outlook have raised concerns about growing competition in the AI chips market.
On Thursday, Erste Group analyst Hans Engel downgraded AMD stock to Hold from Buy. Engel noted that AMD expects further growth in 2025, driven by higher demand for high-performance CPUs and GPUs in data center environments. That said, the analyst highlighted that AMD’s operating margin in recent quarters has been lower than the sector average. In fact, the company’s EBIT (earnings before interest and taxes) margin was slightly negative in the last quarter.
Overall, Engel contends that AMD’s P/E multiple looks elevated, given that its operating margin has not yet improved and its return on equity is below average.
Unlike Engel, the majority of analysts covering AMD stock remain bullish on its long-term prospects. For instance, Truist Securities analyst William Stein recently reiterated a Buy rating on AMD stock with a price target of $213. Interestingly, Stein upgraded AMD’s rating to Buy from Hold in late August. The analyst believes that AMD will continue to gain traction among customers. Stein added that a meeting with management reinforced his constructive views on the stock.
Is AMD Stock a Buy, Sell, or Hold?
Overall, Advanced Micro Devices stock scores Wall Street’s Moderate Buy consensus rating based on 25 Buys and 12 Holds. The average AMD stock price target of $184.44 indicates 18.5% upside potential from current levels.
