AMD inventory slides as BofA cuts to Impartial on 2025 draw back dangers to expecations

Investing.com — Financial institution of America downgraded Superior Micro Gadgets (NASDAQ:AMD) to Impartial from Purchase in a analysis observe on Monday, citing draw back dangers to its 2025 outlook.

The agency lowered its value goal for the inventory to $155 from $180 and lowered its 2025/26 EPS estimates by 6% and eight%, respectively, reflecting a 13-23% hole versus consensus.

Two major components are stated to be driving BofA’s cautious stance. First, the financial institution says aggressive pressures in AI from NVIDIA (NASDAQ:NVDA) and customized chip suppliers like Marvell (NASDAQ:MRVL) and Broadcom (NASDAQ:AVGO) may restrict AMD’s market share good points.

The financial institution famous, “Lately largest cloud buyer, Amazon (NASDAQ:AMZN) strongly indicated its desire for various customized (Trainium/ MRVL) and NVDA merchandise, however an absence of sturdy demand for AMD,” whereas different main cloud gamers similar to Google (NASDAQ:GOOGL) have comparable preferences.

BofA forecasts AMD sustaining simply 4% of the $200 billion AI accelerator market in 2025, in comparison with NVIDIA’s commanding 80%+ share.

Second, a possible correction within the PC processor market throughout the first half of 2025 provides to issues. After a big 40% half-on-half surge in AMD’s shopper PC gross sales throughout late 2024, Bofa believes the market may expertise a slowdown, difficult AMD’s progress momentum.

Regardless of these headwinds, BofA acknowledged AMD’s constant execution and its capacity to capitalize on Intel’s restructuring struggles, offering alternatives to increase its market share in PC and server CPUs.

The observe additionally highlighted AMD’s sturdy presence with Microsoft (NASDAQ:MSFT), Meta (NASDAQ:META), and Oracle (NYSE:ORCL) as positives however flagged restricted alternatives for the corporate to surpass Road estimates within the AI area.

Whereas AMD stays well-positioned within the compute market, BofA believes expectations for 2025 may mood enthusiasm, resulting in the downgrade.