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AMD Stock Slumps After Downgrade: Trailing in the AI Chips Race

Wesley ParkWednesday, Jan 8, 2025 10:27 am ET
3min read


AMD's stock took a hit Monday after Bank of America Securities downgraded the stock to "neutral" from "buy" and lowered its price target to $155 from $180. The analysts pointed to increased competition for AI chips from Nvidia, growing customer preference for cloud custom chips from Marvell Technology and Broadcom, and a potential slowdown in demand for PC processors. However, AMD's AI chip pipeline is behind Nvidia's, which could limit its potential market-share gains in the AI chip market.



AMD's open-source approach and focus on raw computational horsepower at competitive prices have positioned it as a viable alternative to Nvidia, particularly for customers prioritizing performance and value over a comprehensive software ecosystem. However, AMD's market share in AI server sales is projected to decrease to around 75% by 2025-2026 as competitors like AMD step up with competing products.

NVDA, AMD, AI Market Cap


Strategic partnerships and acquisitions play a significant role in AMD's AI chip strategy, helping the company to strengthen its competitive position in the market. AMD has formed strategic partnerships with Microsoft, Google Cloud, Dell, and Oracle Cloud Infrastructure to offer its AI hardware through their cloud platforms and servers. Additionally, AMD's acquisition of Xilinx has expanded its product portfolio and strengthened its position in the AI chip market.



In conclusion, AMD's stock slump after the downgrade reflects the challenges it faces in the AI chip market, where it is trailing behind Nvidia. While AMD's open-source approach and strategic partnerships have positioned it as a viable alternative, its market share is projected to decrease in the coming years. Investors should closely monitor AMD's progress in the AI chip market and consider the potential impact of increased competition and strategic partnerships on the company's future performance.
Comments

Post
the_doonz
01/08
$AVGO has just made an addition here.
0
JRshoe1997
01/08
@the_doonz How long you been holding $AVGO? Any predictions on where it's headed?
0
enosia1
01/08
$AVGO should finish at 230.
0
investortrade
01/08
$AVGO is on a roll today. Investors are pushing the stock higher and higher.
0
Anteater_Able
01/08
$AVGO needs to retest the gap, if not fill it, especially after such a significant jump based on forward revenue projections for the next three years. This kind of leap can lead to overvalued stocks.
0
Jelopuddinpop
01/08
$AVGO Just like we said yesterday, a beautiful retest and rejection at 233. It’s uncanny. Next stop, 220.
0
stydolph
01/08
@Jelopuddinpop Think it'll hold at 220?
0
Dynasty__93
01/08
$AVGO ended the day above 235.
0
goldeneye700
01/08
@Dynasty__93 How long you holding $AVGO? You think it'll keep climbing?
0
YungPersian
01/08
$AVGO, I need you to pump this stock to oblivion. I'm going all in.
0
StrangeRemark
01/08
Holding AMD long-term. Diversification and those sweet partnerships make it a solid play for me. Not just chips, it's the strategy.
0
_punter_
01/08
@StrangeRemark How long you planning to hold AMD? Curious if you've got a timeline or just riding it out.
0
MacaroniWithDaCheese
01/08
Market share dip by 2025-26? Sounds like AMD needs to hustle up some new tricks or strategic plays.
0
HobbyLegend
01/08
Cloud custom chips from Marvell and Broadcom sound dope, but can they really take a bite out of Nvidia's pie?
0
mmmoctopie
01/08
AMD's got cloud giants as allies, but will that be enough to take down Nvidia's fortress in the AI chip race? 🤔
0
maximalsimplicity
01/08
Nvidia's lead seems insurmountable, but AMD's cheap.
0
Affectionate_You_502
01/08
Marvell and Broadcom gaining traction, AMD better adapt. 😅
0
No-Explanation7351
01/08
Xilinx acquisition was a solid move, but will it be enough to keep AMD ahead of Broadcom and Marvell's custom cloud chips?
0
Silgro94
01/08
Holding AMD long-term, betting on strategic partnerships.
0
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
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