AMD’s results were solid. Why Wall Street wanted more.

AMD (NASDAQ:AMD) offered up stronger-than-expected third-quarter results, but concerns about its fourth-quarter guidance have cropped up on Wall Street, suggesting that the artificial intelligence bar “remains high” for now.

Shares fell 8% in premarket trading on Wednesday, while peers Nvidia (NVDA), Marvell (MRVL) and Intel (INTC) also traded fractionally lower.

“We remain impressed by AMD’s progress in all markets, especially AI — $5B in the first year of a brand-new product is a good achievement,” Morgan Stanley analyst Joseph Moore wrote in a note to clients. “But we have also highlighted that expectations are even higher, and unless the view is that AMD can take market share in CY25, which we do not forecast, there won’t likely be much sequential growth through the year given that we exit CY25 at an $8B run rate vs. the $5B in CY24 – which likely represents 15%+ market share in inference.”

Moore, who has an Equal-Weight rating on AMD, tweaked his price target to $169 from $178, noting that the expectation for now is that the AI business won’t see the quarter to quarter momentum in 2025 that it has seen so far in 2024.

Jefferies analyst Blayne Curtis agreed and pointed out that the upped guidance for AMD’s AI business to $5B just got the company to where Wall Street already was.

“AI still dominates this story, and while the company did raise every quarter this year, the concern from here is that AMD won’t be able to provide upside to St. estimates that are already $8-9B for CY25,” Curtis wrote.

“The stock likely treads water until there is better visibility on AI for 2025,” he added.

Financials, guidance

For the period ending September 28, AMD earned $0.92 per share as revenue rose 18% year-over-year to $6.82B. Included in that was strength in the company’s data center segment, which rose a record 122% year-over-year $3.5B, thanks to the company’s AI processors.

The client segment — which includes PC processors — also saw strength, as sales for the segment rose 29% year-over-year to $1.9B.

Conversely, AMD saw trouble in its gaming and embedded segments, as revenue fell 69% year-over-year to $462M and 25% year-over-year to $927M, respectively.

A consensus of analysts expected AMD (AMD) to earn $0.92 per share on $6.71B in revenue during the period.

AMD (AMD) expects fourth-quarter revenue to between $7.2B and $7.8B, with the midpoint of $7.5B slightly below the $7.55B analysts were expecting.

Buying opportunity?

Though some are concerned about AMD going into 2025, any sell-off could be a buying opportunity for investors some believe.

“Despite the minor guidance miss, AMD is in a favorable position, and the post-earnings weakness is likely a buying opportunity,” Victor Dergunov, Investing Group Leader for The Financial Prophet, wrote in an email.

Evercore ISI analyst Mark Lipacis reiterated his Buy rating and upped his price target to $198 from $193 on the belief that “the company continues to gain traction” as the second-biggest player in the AI accelerator market.

“History shows that one ecosystem typically captures 70-80% of the value of each computing era, which we’ve argued would be NVDA, leaving 20-30% of a rapidly growing market for AMD to prosecute as the only other merchant chip supplier,” Lipacis wrote.