AMD Faces Analyst Downgrades Amid Export Restrictions, Earnings Report Awaited
1min read AMD (AMD.US) is set to release its quarterly earnings report after the market close on Tuesday, and in the lead-up to this event, several analysts have lowered their target prices for the company. This adjustment comes amidst tightened U.S. export restrictions on chips to China, which has raised concerns about AMD's ability to fill the gap left by its reliance on the Chinese market.
Analysts anticipate that AMD's first-quarter revenue will reach $7.13 billion, marking a 30% year-over-year increase. Adjusted earnings are projected to be $1.55 billion, or $0.94 per share, representing a growth of over 50% compared to the same period last year. Sales in the data center segment are expected to grow by 55%, reaching $3.63 billion.
U.S. Bank Securities recently reduced AMD's target price from $110 to $105, citing the new licensing requirements imposed by the Trump administration as an "effective export ban" on AMD's MI308 chip. amd had previously warned that this could result in an $800 million loss if the necessary permits are not obtained. Meanwhile, competitor NVIDIA has indicated that losses related to its H20 chip could amount to as much as $5.5 billion.
Deutsche Bank and Wedbush Securities also lowered their target prices for AMD. Deutsche Bank reduced its target from $120 to $105, while Wedbush Securities cut its target from $150 to $115, almost simultaneously.
Among analysts tracking AMD, the average target price is $123.50, which is a 25% premium over the closing price of $98.80 from the previous Friday. Out of the 12 analysts surveyed, six rated the stock as a "buy," five as a "hold," and one as a "sell." AMD's stock has lost nearly a fifth of its value so far this year.
Despite the uncertain trade environment, there are positive signs in the artificial intelligence sector. Major tech companies like Meta Platforms, Microsoft, and Alphabet have reaffirmed their significant investments in AI infrastructure. Meta Platforms plans to increase its capital expenditure to between $64 billion and $72 billion this year, while Microsoft and Alphabet have set AI spending targets of $80 billion and $75 billion, respectively.
This continued investment in AI infrastructure suggests that large enterprises are prioritizing AI development despite the trade uncertainties. This trend is seen as favorable for companies involved in AI, including AMD. The upcoming earnings report will be crucial in providing insights into AMD's performance and its strategies to mitigate the risks associated with its reliance on the Chinese market. Investors will be looking for a clear roadmap from AMD's management on how the company plans to navigate these challenges and ensure long-term success.
Ask Aime: Is AMD in trouble as the market frets over China chip restrictions?
