AMD Snatches A Downgrade Ahead Of Q4 Results: What's Going On
Portfolio Pulse from Shanthi Rexaline
Ahead of its Q4 earnings release, AMD received a downgrade from Raymond James analyst Srini Pajjuri, changing from a Strong Buy to Outperform, with a price target increase from $190 to $195. The downgrade is due to high AI revenue expectations, with AMD's stock trading at 33 times the adjusted non-GAAP estimates for 2025, which already discounts a 20% unit share for AI GPUs. Pajjuri compares AMD's valuation to Nvidia's, noting that Nvidia is likely to have shipped more AI chips and is on track to increase shipments, while AMD capturing 20% of the AI chip market is seen as challenging. AMD is expected to report non-GAAP earnings per share of 77 cents on revenue of $6.12 billion. AMD shares fell 0.41% in premarket trading.
January 30, 2024 | 1:51 pm
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NEUTRAL IMPACT
Nvidia is used as a benchmark in the AMD downgrade by Raymond James, with its forward P/E multiple of 26 times being compared to AMD's. Nvidia is likely to have shipped 2 million AI chips in 2023 and is on track to increase unit shipments to 3.2 million in 2024.
While Nvidia is mentioned as a comparative benchmark, the news is primarily focused on AMD and does not directly impact Nvidia's stock in the short term.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 50
NEGATIVE IMPACT
AMD was downgraded from Strong Buy to Outperform by Raymond James, although the price target was increased from $190 to $195. The downgrade is due to high AI revenue expectations, with the stock trading at a high valuation. AMD is expected to report non-GAAP EPS of 77 cents on $6.12 billion revenue.
The downgrade by a prominent analyst could lead to a negative perception among investors, potentially impacting the stock price negatively in the short term, despite the increase in price target.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 100