AMD stock under pressure: Current target price reductions
The AMD stock is currently under significant pressure with notable price declines, leading to numerous target price reductions by analysts. These adjustments are significant for retail investors as they affect the assessment of the company’s future performance.
Current target price reductions and analyst opinions
Bernstein has lowered the target price for AMD from $125 to $95, maintaining a “Market Perform” rating. The reduction is justified by challenges in the PC market, new licensing requirements for AI accelerators in China, and additional operating costs due to the acquisition of Xilinx Technology. The potential in the AI sector is seen as uncertain, particularly due to the sanctions against China.
Morningstar reduced the fair value of the stock from $140 to $120 due to the same China restrictions. Other institutions like Bernstein and Barclays also revised their target prices downward.
Bank of America (BofA) also drastically lowered its target price. They expect a revenue decline of 4% to 6% under moderate tariffs; in the worst case, revenues could decline by up to 9%.
Reasons for the negative analyst assessment
- Data center revenues fell short of expectations and another decline is forecasted.
- New export rules and sanctions complicate business in the AI segment.
- The core PC business shows weakness after the COVID-induced boom.
- Technical indicators signal a continued phase of weakness.
Importance for retail investors
For retail investors, the reduced target prices are a sign of a more cautious assessment of growth potential. Investors should critically examine their position – depending on their risk tolerance, this may signal taking profits or at least exercising caution. Despite solid fundamentals, AMD currently faces significant challenges.