Advanced Micro Devices (NASDAQ:AMD) shares have plummeted 36% over the past year, a significant drop from their peak value. The company’s AI chip business was once seen as a major threat to Nvidia’s dominance in this space, but that narrative has taken a hit with Street analysts lowering their expectations.
Analysts expect generally in-line guidance for Q4 earnings, with potential upside driven by Server and PC sales. However, the removal of full-year MI300 guidance is expected, which may weigh on the company’s AI bulls. Top-ranked analyst Christopher Rolland from Susquehanna believes that while this deceleration is widely understood, it has been removed from shares.
Rolland remains optimistic about AMD’s prospects, particularly for EPYC (DC CPU), with a strong 2025 outlook driven by share gains. He expects an increase of around 20% in revenue due to the “waterfall effect” from Milan to Genoa to Turin. The analyst also sees potential for a modest recovery in the Embedded segment, driven by improved FPGAs and normalized inventory levels.
However, the Gaming segment continues to face challenges due to weak console sales. Rolland’s analysis suggests that the company may be cautious when discussing declining MI300 sales, which could impact Street estimates.
Despite this, Rolland maintains a Positive (i.e., Buy) rating with a lowered price target from $200 to $165. The stock still offers potential upside of 44% from current levels, making it an attractive option for investors. With 13 Buys, 8 Holds, and 1 Sell, the Moderate Buy consensus rating suggests shares will gain 40% in the year ahead.
Source: https://www.tipranks.com/news/amd-stock-is-under-the-microscope-ahead-of-earnings-heres-what-wall-street-expects