Advanced Micro Devices (AMD) stock has taken a hit, sliding 6% following the release of its fourth-quarter results and outlook. The stock has declined by 34% over the past year. However, despite this decline, AMD’s Q4 results were actually quite strong, with a notable showing in the PC segment and a beat on earnings per share.
The main reason for the sell-off was the disappointing performance in AMD’s Data Center segment, which is crucial for its artificial intelligence (AI) chip sales. Revenue surged 69% year-over-year to $3.86 billion, but fell short of analyst expectations. The segment also failed to meet forecasts despite a significant slowdown from previous quarters.
Analysts are divided on the outlook. Bank of America’s Vivek Arya rates AMD shares Neutral with a $135 price target, citing the company’s product execution and PC CPU gains as positives. However, he also noted that AMD lags Nvidia in AI market share by about a year and faces challenges in software and system integration to grow beyond its current 5% market share.
Arya advised investors to remain on the sidelines, given the risks and limited upside potential. The stock holds a Moderate Buy consensus rating from analysts, with an average target price of $148.28. One-year returns are expected to be around 35%.
Source: https://www.tipranks.com/news/the-nvidia-dream-is-fading-says-bank-of-america-about-amd-stock