Chipmaker shares Advanced micro devices (NASDAQ: AMD) fell 5.4% in Monday trading as of 2:00 PM ET.
Semiconductor stocks fell today after an analyst downgrade from a sell-side Wall Street analyst, capping a rough few days of trading for the artificial intelligence (AI) hopeful.
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Today, Bank of America Analyst Vivek Arya downgraded AMD to neutral from buy, while lowering his price target to $155 from $180.
The timing of today’s rating downgrade was also notable. On Friday, shares of AMD also fell after a statement from one Amazon executive that Amazon Web Services (AWS), the world’s largest cloud platform, saw “no demand yet” for AMD’s MI300 selection of AI GPUs.
AMD had hoped to make inroads in the exploding AI market, but this quote at least suggests that the big clouds are either buying leaders Nvidia‘s most advanced chips or simply create their own in-house designed training chips at a lower cost. Just last week, Amazon said its Trainium2 chips were available, and that it was building a “supercluster” with said Trainium chips for third-party customers and AI startup Anthropic, in which Amazon has invested.
Apparently, BofA sees the rise of cheaper internally made chips from all cloud providers, as well as Nvidia’s upcoming Blackwell chip, as crowding out AMD’s AI opportunities. Additionally, Arya noted that some are predicting soft PC demand in the first half of 2025, which could further weigh on AMD’s results.
AMD has been a stock market favorite for several years, but that has pushed its valuation to 122 times earnings and almost 30 times next year’s expectations. With expectations so high, it’s perhaps not surprising that stocks are reacting so strongly to today’s credit rating downgrade.
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Why Advanced Micro Devices Plunged Today was originally published by The Motley Fool
