On Friday, Daiwa Securities adjusted its stance on AMD (NASDAQ:AMD) stock, downgrading it from a Buy to an Outperform rating while also reducing the price target from $170 to $130. The revised outlook from Daiwa comes amid a mix of positive and negative developments within the company. According to InvestingPro data, AMD currently trades near its 52-week low of $106.50, though analysis suggests the stock is slightly undervalued at its current price of $111.81. With 18 analysts recently revising earnings downward, investors seeking deeper insights can access comprehensive analysis through InvestingPro's detailed research reports.
The analysts noted that AMD management anticipates a strong second half of 2025, particularly with the acceleration of the MI350 production, which is now expected to bolster revenues sooner than initially planned. Additionally, the upcoming release of the MI400 in 2026 is on the horizon. AMD's presence in the server market remains robust, with more than half of the hyper scaler market share, and its core server strength is projected to continue, especially in cloud services. The company's solid market position is reflected in its strong revenue growth of 13.69% over the last twelve months, with analysts forecasting 24% growth for 2025.
Despite Intel (NASDAQ:INTC)'s recent acknowledgment of the need for increased competitiveness, analysts interpreted their statements as indicating that significant changes are not immediately forthcoming. This suggests that AMD may continue to gain ground in the near term.
The gaming sector is showing signs of recovery following a period of inventory reduction, and the embedded segment is also improving, albeit at a slower pace than expected. However, Daiwa expressed concern over AMD's GPU business, particularly the slower-than-anticipated ramp-up of the MI325, which highlights Nvidia (NASDAQ:NVDA)'s market dominance.
In summary, while AMD has demonstrated solid growth, with a 24% increase in top-line revenue and a 42% growth in bottom-line results, the company's performance has not met expectations, particularly in the first half of 2025. This has prompted Daiwa to revise its rating downward, reflecting a more cautious outlook for the near future. InvestingPro subscribers can access additional valuable insights, including 15 more ProTips and detailed financial metrics that help evaluate AMD's market position and growth potential in the semiconductor industry.
In other recent news, AMD has seen adjustments in stock price targets and ratings from multiple research firms. TD Cowen reduced AMD's price target from $150 to $135, maintaining a Buy rating. The firm emphasized AMD's potential in the competitive AI sector and its ability to gain market share in the CPU market. Truist Securities also adjusted AMD's price target to $130 from $145, upholding a Hold rating due to recent financial performance and market dynamics.
Cantor Fitzgerald maintained an Overweight rating on AMD, keeping the price target at $135. The firm noted the company's modest outperformance and upward revision for the December and March quarters. Citi analysts, however, downgraded AMD's shares from Buy to Neutral, slashing the price target to $110 due to concerns over potential inventory build-up and lack of specific forecasts for AI revenue.
Lastly, Piper Sandler adjusted AMD's price target to $140 from $180 while keeping an Overweight rating. The analyst anticipates a temporary impact on the company's performance but remains positive due to the potential for growth in the latter half of 2025. These are all recent developments in the evaluation of AMD's performance and potential.
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