AMD falls as BofA downgrades amid AI, PC concerns

AMD (NASDAQ:AMD) was in focus on Monday as Bank of America downgraded the semiconductor company, citing lower estimates for artificial intelligence and PC-related revenue in 2025.

Shares fell 1.5% in premarket trading.

A higher competitive environment, specifically from Nvidia (NVDA), as well as the “growing” cloud preference for custom chips from Broadcom (AVGO) and Marvell Technology (MRVL) is likely to limit AMD’s market share gain potential, Bank of America analyst Vivek Arya said in a note to clients.

Arya lowered his rating on AMD to Neutral from Buy and cut his 2025 and 2026 earnings estimates by 6% and 8%, respectively. He also lowered his price target to $155 from $180.

“While our forecast implies solid 54% YoY growth, the limited opportunity to exceed higher street estimates could continue to be an overhang on AMD stock,” Arya wrote. “AMD’s pipeline remains 1yr+ behind NVDA’s (which is accelerating) and lacks a competitive networking (switching, optics) portfolio.”

Arya also pointed to the recent comments from an Amazon (AMZN) executive that said the cloud service provider has “not yet” seen heavy demand for AMD’s chips as a negative.

PC weakness

In addition, the PC market could correct in the first-half of 2025, which could bode negatively for the Dr. Lisa Su-led company.

“Even though the PC/server market are growing modestly, AMD still has a chance to expand its share from ~23% currently, given restructuring issues at leader INTC (69% share),” Arya added. “AMD’s challenge (and opportunity) in CY25 will be to take share in enterprise PC where INTC is dominant, while fending off threat from ARM-based (QCOM) rivals.”