Analyst Downgrades AMD and META Amid Valuation Concerns and AI Investments

Jonathan Weber has downgraded AMD due to valuation concerns, while JR Research has downgraded Meta Platforms due to concerns about aggressive AI investments.

In a recent wave of financial news, analysts have expressed reservations about two prominent tech companies, Advanced Micro Devices (AMD) and Meta Platforms (META). The downgrades come amidst concerns about valuation and aggressive AI investments.

Advanced Micro Devices (AMD) faced a downgrade from Jonathan Weber, who cited valuation concerns compared to rival Nvidia. Weber's downgrade follows a 70% share price surge for AMD, suggesting that the company's valuation might have outpaced its fundamentals. Despite reporting compelling business growth results in its Q2 report, AMD's profit growth performance was less appealing [1].

On the other hand, JR Research downgraded Meta Platforms due to concerns about aggressive AI investments without clear revenue generation. Meta's Q2 results showcased significant growth, with a 22% increase in revenue to $47.52 billion, driven by AI investments improving ad monetization. However, the company's guidance for 2026 capital expenditures raised eyebrows, with analysts noting that the relationship between capex and AI is now clear but remains a concern [2].

These downgrades underscore the challenges faced by tech companies in balancing aggressive AI investments with sustainable growth and valuation. While AI is proving to be a significant driver of revenue and user engagement, the financial community remains cautious about the long-term impact of these investments.

References:
[1] https://seekingalpha.com/article/4809124-amd-dont-buy-following-earnings-rating-downgrade
[2] https://seekingalpha.com/news/4480104-sa-analyst-upgradesdowngrades-amd-it-meta-pltr