It wasn’t long ago that AMD was a Wall Street favorite.
For a time, everything AI-related seemed to be easily turned to gold, and Advanced Micro Devices was no exception. Investors believed that AMD’s position as No. 2 right behind Nvidia (NVDA) could translate to huge rewards, too.
But just as AMD’s (AMD) latest earnings report shows, expectations don’t always align with reality.
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AI is a big part of AMD’s business, but the company’s AI-market share remained significantly lower than that of Nvidia (NVDA) , which dominates the market for graphics processors.
AMD’s stock doubled in 2023 due to excitement around its AI growth potential. But last year the stock lost 18%.
AMD closed at $109.72 on Feb. 6, the lowest since October 2023.
AMD’s earnings disappoint investors
Initially recognized for its dominance in PC processors, AMD has shifted focus to the rapidly growing AI market.
In 2023 the company launched the MI300 series, AI processors that competed with Nvidia’s H100. AMD is pulling forward its MI350 and is on track to release the MI400 in 2026.
But AMD still needs more in software, scale deployment, and system-level integration to boost its current market share of less than 5%, Bank of America analyst Vivek Arya says.
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For the fourth quarter Advanced Micro Devices posted earnings of 31 cents a share, or an adjusted $1.09 a share, on revenue of $7.66 billion.
While the revenue beat the Wall Street consensus and the adjusted EPS met expectations, the unadjusted EPS missed sharply.
Investors were also disappointed in AMD’s data-center revenue, which reflects demand for its AI processors. The sector’s sales jumped 69% to $3.9 billion, yet missed the consensus estimate of $4.15 billion.
AMD expects both the data-center business and AI GPU sales to grow by strong double-digit percentages in 2025, but no specific numbers were given. That wasn’t enough to impress investors, especially given that Nvidia’s sales doubled during each of the past two years.
Veteran analyst plans to fully exit AMD position
Wall Street veteran Stephen “Sarge” Guilfoyle shared his views on AMD stock with TheStreet Pro after reviewing AMD’s latest financials.
Guilfoyle’s career stretches back to the 1980s on the NYSE floor. His investment style is best described as hybrid, blending economic, fundamental and technical analysis to determine which stocks are worth his hard-earned investment capital.
“I am going to downgrade AMD to a sell and work toward exiting the position completely,” Guilfoyle wrote.
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Guilfoyle said he was “disappointed” in AMD. He recently started rebuilding a position in AMD before the earnings. He now says that “was a mistake.”
He added that he is seeing “a very negative sign” from the recent technical analysis of the stock.
At the same time Guilfoyle is not altogether bearish on AMD. “CEO Lisa Su and her balance sheet are too good at her job to stay down forever,” he said.
“Do I plan to reenter at some point? Of course, but I will have to see something constructive first from a technical perspective,” he wrote.
Analysts lower AMD stock price targets
Several Wall Street analysts trimmed their price targets on AMD stock following the earnings.
Bank of America lowered its price target on AMD to $135 from $155 and reiterated its neutral rating.
The firm noted that AMD has yet to show how it can carve out a strong position against Nvidia’s dominance, and any real upside still depends largely on market share gains against Intel (INTC) in more mature markets.
“We think it could be hard for AMD to ‘win’ the AI narrative despite the absolute AI growth rate,” the investment firm said. It added that AMD’s non-AI and cyclical PC and gaming products could help revenue growth, but their thinner profit margins could weigh on overall profitability.
Citi analyst Christopher Danely downgraded AMD to neutral from buy with a price target of $110, down from $175, thefly.com reported.
The analyst said AMD reported “decent” results but didn’t provide AI revenue guidance, and AMD’s AI revenue could be flat to down for the first half of 2025 with margin dilution.
Morgan Stanley also lowered its price target on AMD, to $137 from $147, and reiterated an equal weight rating (essentially a neutral rating).
AMD’s overall numbers were about in line, but the mix, with more client and less data center, was “somewhat underwhelming,” according to the firm.
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Morgan Stanley cut its AMD earnings per share projections by 1% for 2025 and 8% for 2026, with the analyst expecting “slightly larger cuts to consensus.”
AMD closed at $109.72 on Feb. 6, the lowest since October 2023. The stock is down 9.2% year-to-date.
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