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Ahead of its fourth-quarter earnings tomorrow, AMD saw its price target cut by Cantor Fitzgerald, with data center revenues expected to remain below consensus. AMD's shares have demonstrated lackluster performance over the past six months as markets have questioned the firm's ability to compete with NVIDIA in the AI industry and remained downbeat about the performance of the PC market during the year's first half. Cantor kept AMD's share rating at Overweight as part of a note that reduced the share price target to $135 from $150.
AMD Scores Another Bearish Analyst Note Ahead Of Q4 Earnings
Before Cantor's price cut today, several investment banks and firms have already turned bearish on AMD's prospects. Bank of America got the ball rolling in December as it slashed AMD's price target to $155 from $180 and reduced its rating from Neutral to Buy. As part of its coverage, the bank noted that constrained supplies of NVIDIA's Blackwell GPUs would increase demand for custom AI chips from Marvell and Broadcom and reduce the market available for AMD's products. It added that AMD would face a tighter PC market in 2025 but added that AMD might growth its revenue between 15% to 20% annually by capitalizing on Intel's weakness.
BofA was followed by equally bearish coverage from HSBC and Goldman Sachs. HSBC's note cut AMD's share price target to $110 from $200 as it noted that "AMD's AI GPU roadmap is less competitive than previously anticipated, limiting its penetration into the AI GPU market." Along with HSBC, Wolfe Research had also noted that "AMD won’t be in a position to guide AI for CY25 – which will in itself drive concerns."
Cantor Fitzgerald's latest AMD note comes as the firm gears up to deliver its fourth-quarter earnings tomorrow. The firm's shares slipped by 7% after its previous earnings as its Q4 guidance of $7.50 billion midpoint revenue fell below analyst estimates of $7.54 billion. Cantor's note reduces AMD's share price target to $135 from $150 but keeps an Overweight rating on the stock.
The analysts also expect a Q4 beat but a Q1 miss, with their estimate of $7 billion in 2025 data center GPU revenue falling below consensus estimates. Data center is AMD's business division responsible for supplying GPUs for AI workloads, and in its Q3 earnings, the division's revenue grew by $2 billion.
Investment bank Goldman Sachs had cut AMD's price target to $129 from $175 in a note early last month. Like BofA, Goldman had worried about the impact of Arm-based chips on AMD's products. According to Goldman Sachs, the rise of Arm-based products would strain AMD's margins, revenue growth and multiples. Consequently, the bank expects "the stock to remain range-bound until the market regains confidence in AMD's future growth and margin trajectory."
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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