Advanced Micro Devices shares extended their recent run of declines Wednesday after a top Wall Street analyst cautioned that the chipmaker could continue to trail its peers’ performance well into the new year.
Advanced Micro Devices (AMD) shares have fallen more than 28% over the past six month, well south of the 9% decline for the PHLX Semiconductor Sector benchmark and have lost around $63 billion in value since issuing a disappointing sales and profit outlook in late October.
Rivals such as Broadcom (AVGO) and Marvell Technology (MRVL) , meanwhile, have risen 31% and 55% respectively over the same time period, with the former topping the $1 trillion valuation mark late last year.
Nvidia, meanwhile, briefly held the title of world’s most-valuable company late last year, with a $3.4 trillion market cap, and its shares, while recently stalled, have risen more than 168% over the past year compared to just a 4% gain for AMD.
HSBC analyst Frank Lee sees that trend continuing, and lowered his price target on AMD shares by $90, to $110 per share, and clipped his rating on the stock to ‘reduce’ from ‘buy’ in a note published Wednesday.
AMD CEO Lisa Su has said the total addressable market for AI accelerators would rise to $500 billion by 2028.
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“AMD’s share price has corrected by 24% in the past three months (versus -12% for the PHLX Semiconductor index), but we believe further downside remains,” Lee and his team wrote.
HSBC sees ‘downside momentum’ for AMD
Lee said AMD’s reliance on Samsung for its high-end memory chips could contribute to the “downside momentum” seen in demand for its new line of MI325 graphics processing units.
Samsung, in fact, posted weaker-than-expected fourth quarter profits Wednesday in Seoul thanks in part to the surging R&D costs tied to the ramp of its new, higher-end HBM3e memory chips, which compete against South Korea-based rival SK Hynix.
“We now think AMD’s AI GPU roadmap is less competitive than previously anticipated, limiting its penetration into the AI GPU market,” Lee said.
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Lee also argues that AMD will continue to lag behind market leader Nvidia NVDA, which is ramping up production of new Blackwell line of AI-powering chips and unveiled new gaming and PC strategies earlier this week, well into the new year.
“While AMD is set to launch its MI350 chip in 2H25, it 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 launch,” Lee said.
HSBC sees ‘downside momentum’ for AMD
AMD, which is slated to publish its fourth quarter earnings on Jan. 28, told investors in October that MI300 sales could rise to more than $5 billion this year, with overall revenues in the region of $7.5 billion.
Analysts are looking for a bottom line of $1.08 per share with data center revenues of $4.15 billion, client sales of $1.95 billion and gaming and embedded revenues totaling around $1.4 billion.
Nvidia, which will publish its fourth quarter earnings in late February, is likely to see revenues rise 73% from a year ago to $38.1 billion.
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AMD, like its U.S.-based rivals, is also facing the prospect of slumping China sales as trade restrictions between Washington and Beijing escalate.
Late last autumn, China banned the exports of key rare minerals used in high-tech manufacturing, while the China Association of Communication Enterprises, an industry group, said U.S. chip supplies were “no longer safe” and prompted companies to source from domestic producers.
Advanced Micro Devices shares were marked 2.62% lower in premarket trading to indicate an opening bell price of $125.50 each.
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