AMD Faces Challenges in AI Chip Market
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 15h ago
0mins
Should l Buy AMD?
Source: NASDAQ.COM
- Intensifying Market Competition: AMD is striving to catch up with Nvidia in the AI chip market for data centers, reporting total revenue of $34.6 billion in 2025, with the data center segment contributing $16.6 billion, a 32% increase; however, its stock plummeted 15% due to concerns over its deal with OpenAI.
- Customer Dependency Risk: AMD's partnership with OpenAI raises market concerns as OpenAI has committed to purchasing 6GW of GPU compute capacity by 2030, yet its annual revenue of $20 billion is insufficient to meet these obligations, potentially impacting AMD's future sales growth.
- Technological Advancement Outlook: AMD plans to launch the MI450 GPU in 2026, expected to deliver 36 times the performance of its previous generation; although initial deliveries are on schedule, uncertainty remains regarding OpenAI's fulfillment of subsequent orders, which could affect AMD's long-term revenue expectations.
- Valuation Pressure: Despite AMD's non-GAAP earnings of $4.17 per share and a P/E ratio of 49.9, slightly higher than Nvidia's 43.5, concerns over its high valuation are mounting, suggesting that the stock may face further downside pressure in the short term, prompting investors to consider their entry timing carefully.
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Analyst Views on AMD
Wall Street analysts forecast AMD stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AMD is 284.10 USD with a low forecast of 200.00 USD and a high forecast of 377.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
36 Analyst Rating
27 Buy
9 Hold
0 Sell
Strong Buy
Current: 192.500
Low
200.00
Averages
284.10
High
377.00
Current: 192.500
Low
200.00
Averages
284.10
High
377.00
About AMD
Advanced Micro Devices, Inc. is a global semiconductor company. The Company is focused on high-performance computing, graphics and visualization technologies. Its segments include Data Center, Client and Gaming, and Embedded. Data Center segment includes artificial intelligence (AI) accelerators, microprocessors (CPUs) for servers, graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), smart network interface Cards (SmartNICs) and Adaptive system-on-Chip (SoC) products for data centers. Client and Gaming segment includes CPUs, APUs, chipsets for desktops and notebooks, discrete GPUs, and semi-custom SoC products and development services. Embedded segment includes embedded CPUs, GPUs, APUs, FPGAs, system on modules (SOMs), and Adaptive SoC products. It markets and sells its products under the AMD trademark. Its products include AMD EPYC, AMD Ryzen, AMD Ryzen PRO, Virtex UltraScale+, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- AMD Investment: After AMD's stock dropped 17% due to a first-quarter revenue forecast that disappointed investors, Wood quickly increased her stake in the company, which expects $9.8 billion in revenue for the quarter, highlighting its long-term potential in the AI market.
- CoreWeave Acquisition: Wood bought shares of CoreWeave as its stock fell about 50%, and despite the absence of recent earnings reports, the company's strong demand for AI workloads and triple-digit revenue growth indicate a positive outlook.
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