It will be a “bumpy ride” for Advanced Micro Devices investors due to strong competition in the artificial intelligence space, according to HSBC. The bank downgraded the semiconductor stock to reduce from buy and lowered its price target to $110 per share from $200. HSBC’s forecast implies a roughly 13% pullback from Tuesday’s close. Analyst Frank Lee said increased competition for graphic processing units, from companies including Nvidia, Marvell and Broadcom will pressure AMD — even after shares have dropped 26% over the past three months. GPUs are key components for powering AI programs and systems. AMD YTD mountain AMD stock. “We see additional downside as we now believe its AI GPU roadmap is less competitive than we previously thought. Hence, we believe AMD wouldn’t be able to penetrate the AI GPU market as much as we had earlier anticipated. In particular, we see downside to its 1H25e AI GPU momentum given lukewarm demand for its new MI325 GPU, as we expect to see lower spec HBM3e memory in MI325 due to Samsung’s ongoing struggles with ramping up its higher spec HBM3e,” Lee said. Further adding to HSBC’s pessimistic view on AMD is its view that the company’s momentum outside of AI will be lackluster, Lee noted. “We expect client revenue to grow 12% [year over year] in FY25e, higher than overall FY25e PC notebook y-o-y unit growth of 4%. However, this still signifies a significant deceleration vs 44% client revenue y-o-y growth in FY24e,” Lee said. AMD shares fell 2% following the downgrade. To be sure, most analysts are positive on the stock. LSEG data shows 43 of 54 analysts covering the chipmaker have a buy or strong buy rating on it. The average price target also implies 43% upside.
