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In recent weeks, we've continued to highlight the now-prophetic prognostication by Wolfe Research, where the Wall Street player foresaw AMD's inability "to guide AI for CY25." In fact, it was this omission more than anything else that hammered AMD shares in the post-earnings, after-hours trading session. And, this lack of clarity is now featuring prominently in the litany of commentary from major Wall Street players.
For the benefit of those who might not be aware, AMD comfortably beat the top- and bottom-line consensus estimates for the fourth quarter of 2024, raking in $7.66 billion in revenue against a consensus estimate of $7.53 billion. However, the AI-critical data center segment failed to meet consensus sales expectations, with this weakness more than offset by undue strength in AMD's client computing business.
BofA Lowers $AMD PT to $135 from $155, Maintains Neutral Rating
"Reiterate Neutral as AMD has not (yet) managed to articulate how it can carve an important niche versus NVDA’s dominance and custom ASIC chip’s growing importance in AI silicon, with any upside surprise largely…
— Wall St Engine (@wallstengine) February 5, 2025
Coming back, in what is a customary post-earnings commentary, Bank of America's Vivek Arya notes that AMD's guidance for the first quarter of 2025 was "modestly better" due to the ongoing strength in the company's client-facing PC/gaming business. This contrasts sharply with Intel's relatively weaker guidance for Q1, which was "impacted by its greater segment exposure to tariff-related pull-ins from customers."
Critically, BofA now expects AMD to earn $7.5 billion in revenue from AI GPUs in 2025, which marks a ~$0.5 billion downgrade from the firm's previous modeling. Arya went on to note:
"AMD did not guide AI GPU for the year, but just said it expects 1H25 to be flat HoH, with stronger 2H on the back of its new MI350 ramp."
Accordingly, the BofA analyst lowered his target for AMD shares from $155 to $135, while noting:
"... AMD has not (yet) managed to articulate how it can carve an important niche versus NVDA’s dominance and custom ASIC chip’s growing importance in AI silicon, with any upside surprise largely dependent on share gains against INTC in more mature markets."
Elsewhere, KeyBanc analyst John Vinh chose to overlook AMD's data center-related faux pas of sorts, opting instead to rely on AMD's future market share gains in the AI GPU sphere to justify his continued 'overweight' recommendation for the stock. Even so, Vinh was crystal clear on AMD's immediate prospects in relation to the AI GPU segment:
"Data Center GPUs revenues exceeded $5B in 2024, but AMD would not provide explicit guidance for 2025, [instead merely] indicating Data Center, including GPUs, would grow strong double digits this year. Additionally, with the ramp of MI355 expected midyear, Data Center growth is expected to be second-half weighted, as first-half 2025 Data Center revenues are expected to be equal to second-half 2024."
Barclays, however, remains unequivocally bullish on AMD, reiterating its 'overweight' rating and a $140 price target for the stock.
While conceding that "MI300 undergrew the Server CPU business in Q4 (we model $1.75B) and is guided to just flattish for 1H25 vs. 2H24," Barclays analyst Tom O'Malley pointed out that annualizing the downbeat Q1 run-rate for AMD would still imply a ~30 percent year-over-year growth in revenues, and that the "company is adamant that the business will exit CY25 above the CY24 exit rate." O'Malley noted:
"The company also pointed to '10s of billions' in the next several years."
While highlighting the positive catalysts for AMD, O'Malley wrote:
"On the positive side, the company is moving through AI product transitions faster and plans to pull MI350 (CDNA 4) into mid-2025, then introduce a new compute (CDNA next) and rack-level architecture with MI400 several quarters later."
The Barclays analyst, therefore, views the current pullback in AMD shares as a buying opportunity, taking heart from the management's "long history of executing on promised share gains."
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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