AMD (NASDAQ:AMD) shares fell more than 2% pre-market today after HSBC analysts downgraded the stock to Reduce from Buy, slashing the price target nearly in half to $110 from $200. The move reflects concerns over AMD’s competitive position in the AI GPU market and potential setbacks in its product roadmap.
The analysts highlighted tepid demand for AMD’s new MI325 GPU and potential delays in the launch of a competitive AI rack solution as key factors limiting the company’s ability to gain ground against market leader Nvidia. This outlook led to a significant downward revision in AMD’s fiscal 2025 AI GPU revenue projections, which were reduced from $12.3 billion to $8.1 billion—well below the market consensus of $9.5 billion.
While AMD’s share price has already declined 24% over the past three months, the analysts see further downside. They noted that AMD’s penetration into the AI GPU market is likely to be much weaker than previously expected, further weighing on its valuation.
The company’s product roadmap remains on track with the MI350 chip expected to launch in the second half of 2025. However, the analysts believe AMD’s ability to compete directly with Nvidia’s NVL rack platform will be delayed until late 2025 or early 2026, coinciding with the anticipated launch of the MI400.