AMD (AMD.US) ushered in a long and short debate: Goldman Sachs sticks to the “neutral” rating, and HSBC doubles its target price to $200

The Zhitong Finance App learned that Goldman Sachs maintains a “neutral” rating for AMD (AMD.US), with a target price of $140. Despite the semiconductor giant's impressive returns and revenue, investors believe AMD's growth potential is being dampened by intense competition in the AI and GPU space.

According to InvestingPro data, AMD's price-earnings ratio is 101.36, which means its valuation is at an all-time high. Despite this, the stock has achieved a return of 19.28% over the past six months, which shows that investors' enthusiasm for artificial intelligence is high and their investment continues to increase.

AMD's revenue has increased by 21.71% over the past 12 months, reaching a total annual revenue of $27.75 billion, and its operating conditions continue to be good. As a fabless manufacturer that produces server and PC CPUs based on the X86 architecture, custom SoCs, and commercial GPUs, AMD's strategic focus has enabled it to make significant progress in the server CPU and PC CPU markets.

Challenges remain

Goldman Sachs expects AMD's share growth in the server CPU market to slow as the adoption rate of ARM-based processors continues to rise. ARM processors are becoming increasingly popular due to their efficiency and scalability. On the other hand, AMD's commercial GPU products face intense competition from Nvidia, whose leadership also benefits from its powerful AI software stack. Nvidia's leading position in the AI field and its mature ecosystem make it difficult for AMD to quickly seize market share.

Goldman Sachs also mentioned that more and more capital flows to ASICs (chips designed specifically for specific AI tasks), which is another challenge. Furthermore, AMD's continued investment in AI accelerators such as the MI300 series indicates that it is actively entering the AI field. This investment model may limit short-term profit growth, and if the financial situation falls behind AI expectations, it may also lead to investor disappointment.

Analysts say there is uncertainty

AMD's AI future remains a topic of discussion for analysts, with recent reports showing both optimism and caution. KeyBanc Capital Markets reaffirmed its “on par with the market” rating and mentioned that the MI355 AI GPU will bring in $7-8 billion in AI revenue in 2025.

Truist Securities maintains its “hold” rating, saying the company's data center GPU strategy and customer acceptance remain uncertain. Mizuho raised its price target to $152 and revised its revenue forecast for the June quarter to $7.4 billion.

There are still analysts who are optimistic about the future

Melius Research became more optimistic, raising AMD's rating to “buy,” giving a new target price of $211, based on a scenario where earnings per share (EPS) could reach $8 within two years.

HSBC raised AMD's rating to “buy,” and the bank also doubled its price target from $100 to $200. Part of this is because the semiconductor company's new MI350 series products have a premium over competing products. The bank believes AMD's “AI GPU pipeline” may be better than expected due to the MI350 series's pricing premium. The MI350 chip can be installed into existing data center infrastructure, which is also attractive.

Second-quarter profit and AI outlook

AMD will announce its financial results for the second quarter of fiscal year 2025 on August 5. This will be a key point that could reveal its AI plans and revenue path. Investors and analysts are anxiously awaiting guidance on AI accelerator applications, data center growth, and profit margins from huge R&D investments.