Global Bank Downgrades AMD’s AI GPU Roadmap Competitiveness: “Bearish Outlook”

This article does not constitute investment advice. The author holds no positions in any of the stocks referenced.

Current Landscape for AMD: Challenges and Predictions

In light of numerous challenges faced by Intel, investors had anticipated that Advanced Micro Devices (AMD) would swiftly leverage its processor advancements to establish a formidable presence against NVIDIA in the AI GPU market. However, this anticipated shift has not yet occurred, resulting in a fleeting sense of disappointment and prompting a major financial institution to adopt a bearish stance on AMD’s short-term outlook.

HSBC Lowers AMD’s Price Target

HSBC, recognized as the seventh-largest bank by assets globally according to S&P in 2024, has dramatically revised its target price for AMD’s shares, cutting it by 45% from $200 to $110. This adjustment suggests a further potential drop of approximately 11% from the chipmaker’s existing share price.

Market Corrections and Analyst Insights

HSBC’s assessment highlights a significant decline in AMD’s stock, which has decreased by 24% over the last three months, notably contrasting with a 12% dip for the PHLX Semiconductor Index. Analyst Frank Lee has expressed concerns about ongoing vulnerabilities, stating that “further downside remains for the stock.”

According to Lee, AMD’s strategy in the AI GPU sector appears less competitive than previously expected, hindering its ability to penetrate the AI GPU market effectively. HSBC’s analysis suggests a waning momentum for AMD within this critical segment:

“Specifically, we see downside to its 1H25 AI GPU momentum due to lukewarm demand for the MI325 GPU, as lower-spec HBM3e memory is expected, given Samsung’s ongoing struggles with ramping up its higher-spec HBM3e.”

Future GPU Launches and Competition

While AMD plans to unveil its MI350 GPU in the latter part of 2025, Lee indicates that the company “likely won’t have an AI rack solution to compete with Nvidia’s NVL rack platform until late 2025 or early 2026, when we expect the MI400 to debut.”

This outlook from HSBC reflects a broader trend of skepticism emerging on Wall Street. Wolfe Research remarked in December 2024 that “AMD won’t be in a position to guide AI for CY25 – which will inherently raise concerns.”

Emerging Competition and Market Dynamics

Additionally, Bank of America has pointed out the increasing threat posed by Arm-based competitors, particularly as the infiltration of Arm-based server CPUs reached 7% in Q3 2024, up from less than 5% in 2023 and around 1% in 2022. This growing penetration presents significant challenges to AMD’s market share in the CPU segment.

As the semiconductor landscape continues to evolve, AMD faces mounting pressures from emerging competitors and shifting market dynamics. Investors will be watching closely to see how AMD navigates these challenges and adapts its strategy in the rapidly changing tech environment.

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