This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
Buffeted by uncertainty headwinds that continue to ricochet through the broader semiconductor sphere courtesy of President Trump's incoming sector-specific tariffs, AMD is gearing up to announce its earnings for the first quarter of 2025 later on Tuesday. Yet, one Wall Street player remains decidedly bearish on the stock's near-term prospects.
For the benefit of those who might not be aware, after concluding an initial assessment of the new US export licensing requirements in relation to its China-specific MI308 GPUs, AMD announced back in April that it expects to incur around $800 million in charges related to inventory write-offs, purchase commitments, and related reserves.
According to AMD, the new chip-related export restrictions apply to "China (including Hong Kong and Macau) and D:5 countries, or to companies headquartered or with an ultimate parent in such countries."
As we had highlighted at the time, AMD earned a net income of $1.6 billion in FY 2024. Accordingly, AMD's MI308 GPU-related charges amount to a whopping 50 percent of its total net income for the entirety of 2024.
This brings us to the crux of the matter. Lynx Equity has now penned a fairly bearish note on AMD just ahead of its quarterly earnings, boldly declaring that the stock's "downside is not priced in."
"Just as with INTC [Intel], we expect AMD’s guidance and 2H commentary to surprise to the downside, this despite investor sentiment already in the dumps."
While explaining the constructs of its bearish thesis, Lynx Equity posits that many on Wall Street have blamed Intel's recent weakness on its market share loss to AMD. However, the research house contends that Intel's weakness lately has been largely a function of tariff-driven supply chain uncertainty, where AMD remains equally vulnerable.
Additionally, while the Lynx Equity analyst concedes that the downside to AMD's top-line metric and gross margin from China-specific licensing requirements is largely expected, its "magnitude remains to be seen."
"Three months ago, we were hoping for DeepSeek-related demand to help turn-around AMD’s AI business. However, the licensing requirement imposed last month quashes that hope. Three months ago, we could see a path to $130. We don’t anymore. We see further downside in the stock from current levels."
As such, Lynx Equity expects AMD to earn just $29.1 billion in revenue for FY 2025 vs. consensus expectations of $31 billion, implying a year-over-year growth of only 13 percent.
By applying a 25x multiple to its FY 2025 EPS estimate of $3.6 (vs. $4.4 consensus estimate), Lynx Equity sees a path for AMD shares to only $90.
On the plus side, the research house lauds AMD's liquidity position boost of around $5 billion, courtesy of ~$1.5 billion in new debt issued just ahead of the tariff-related headwinds, and ~$3.5 billion that the company can reasonably accrue by divesting its acquisition of ZT Systems and its server assembly unit.
"We think this provides a cushion to the stock at just the right time as tariff wars drain liquidity from the global supply chain."
AMD shares are down a little over 1 percent at the time of writing. So far this year, the stock is down over 16 percent.
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.
Follow Wccftech on Google to get more of our news coverage in your feeds.
