Shares of chipmaker Advanced Micro Devices (NASDAQ: AMD) fell 5.4% in Monday trading, as of 2 p.m. ET.
The semiconductor stock fell today on the heels of an analyst downgrade from a Wall Street sell-side analyst, capping off a difficult few trading days for the artificial intelligence (AI) hopeful.
Are You Missing The Morning Scoop? Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
Today, Bank of America analyst Vivek Arya downgraded AMD to neutral from buy, while lowering his price target from $180 to $155.
The timing of today’s downgrade was also noteworthy. On Friday, AMD’s stock also declined following a statement from an Amazon executive that Amazon Web Services (AWS), the largest cloud platform on the planet, was “not yet seeing” demand for AMD’s MI300 roster of AI GPUs.
AMD had hoped to make inroads in the exploding AI market, but at least this quote suggests the major clouds are either buying leader Nvidia‘s most advanced chips or merely making their own in-house designed training chips at lower cost. Just last week, Amazon said its Trainium2 chips were available, and that it was building a “supercluster” with said Trainium chips for outside customers and AI start-up Anthropic, in which Amazon has invested.
Apparently, BofA sees the rise of cheaper internally made chips from all cloud providers, as well as Nvidia’s upcoming Blackwell chip, as crowding out the opportunity for AMD in AI. Additionally, Arya noted some have projected soft PC demand in the first half of 2025, which could further weigh on AMD results.
AMD has been a stock market darling for a number of years, but that has pushed its valuation up to 122 times earnings and nearly 30 times next year’s projections. With expectations so high, it’s perhaps not surprising to see the stock react this harshly on today’s downgrade.
Before you buy stock in Advanced Micro Devices, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $872,947!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
