Advanced Micro Devices (NASDAQ:AMD) faces slowing momentum in its AI accelerator business as customer demand proves weaker than expected, as per Seaport Global's supply chain checks. Concerns include limited volume orders, heavy reliance on discounts, and margin pressure, even as the company remains a long-term competitor in the market.
Analyst Jay Goldberg downgraded AMD from Buy to Neutral.
Goldberg said recent supply chain checks show AMD’s AI accelerator business has difficulty meeting what he sees as overly high expectations this year. He downgraded the stock rating and cut financial estimates.
Also Read: IBM-AMD Alliance Targets Drug Discovery, Climate Modeling With Quantum Supercomputers
Goldberg noted that AMD struggles to expand orders from many customers highlighted at its summer AI event. Although the MI Series accelerators continue to improve, he said the market remains tough and customers are highly demanding. He expressed concern that most headline clients have bought only evaluation systems, which are unlikely to translate into volume orders for at least one generation of MI products.
He added that Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META), two key accounts, face scrutiny as they reassess AI spending plans. AMD’s broader use of discounts and support incentives also signals pressure, Goldberg warned, while the company’s margins may weaken if it loses leverage with current HBM suppliers.
While he acknowledged AMD remains a viable long-term player in AI accelerators, Goldberg argued that meaningful market share gains will take longer than expected, prompting the downgrade to Neutral.
Goldberg projected third-quarter revenue of $8.65 billion (prior $8.71 billion) and adjusted EPS of $1.07 (prior $1.15).
Price Action: AMD stock is trading lower by 1.75% to $159.34 at last check on Thursday.
Read Next:
Image: Shutterstock
