Advanced Micro Devices (AMD) is under new pressure after the company warned of rising costs tied to the Trump administration’s latest restrictions on exports of high-end processors to China.
The new curb targets AI chips such as AMD’s MI308 and Nvidia’s (NVDA) H20, which were designed to comply with earlier U.S. trade restrictions under the Biden administration. Both were meant to keep pace with regulations while preserving sales to a key market.
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AMD said the new controls could result in charges of up to $800 million. By comparison, Nvidia expects a $5.5 billion hit.
The updated policy also requires companies to obtain licenses to ship the affected chips. AMD said in a regulatory filing that it “expects to apply for licenses but there is no assurance that licenses will be granted.”
AMD shares dropped 7% on April 16 following the news, and tech stocks broadly slid, with the Nasdaq Composite down 3% on the day.
AMD stock is down 26% year-to-date.
AMD stumbles in AI race
AMD shares have been under pressure for months. The company has been trying to catch up to Nvidia in AI computing, but its stock dropped about 18% in 2024 as it struggled to meet lofty investor expectations in AI.
Related: Analysts overhaul AMD stock price targets following Q4 earnings
Year-to-date, the stock is down 26%, weighed by disappointing earnings, a broader market pullback, and the rollout of DeepSeek, a cheaper Chinese alternative to U.S. AI models.
In February, AMD posted fourth-quarter results that beat Wall Street estimates on sales and earnings. But sales from its key data center segment missed estimates, a troubling sign for a company betting on AI to drive long-term growth.
Analyst lowers AMD stock price target
Morningstar analyst Brian Colello lowered the firm’s stock price target for AMD to $120 per share from $140. The firm has a 4-star rating on the shares but cited high risk.
“AMD’s projected AI gains aren’t as strong as what we would have anticipated last year, and China adds another layer of doubt,” Colello said.
Related: Veteran fund manager rethinks Nvidia stock after shocking export news
China made up 24% of AMD’s revenue in 2024, including non-AI products such as PC CPUs. “But the mix of AMD’s emerging AI business in China isn’t clear,” the analyst noted, “we cut our AI GPU revenue estimates to exclude China, as well as our global PC revenue expectations.”
The analyst also expects these issues to mute long-term revenue growth and has reduced its revenue estimates for AI GPU and PC CPU through 2029.
Still, the analyst sees room for upside. “AMD’s potential PC share gains still appear underappreciated despite tariffs,” he wrote.
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“We anticipate that AMD will carve out a piece of the AI pie in the years ahead, and we expect the company to remain a winner in the PC CPU space.”
Bank of America also flagged risks from the new trade restrictions, saying they could spill into adjacent areas like semiconductor manufacturing equipment, software, and foundries.
“However, we believe AI remains the fastest growing secular growth opportunity in semis,” the firm wrote in a note.
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