AMD downgraded after BI report on weak demand for its AI chips among AWS customers
Dec 09, 2024 - businessinsider.com
Bank of America downgraded AMD to a "neutral" rating, citing increased competitive risks in the AI market. This decision follows a Business Insider report highlighting low demand for AMD's AI chips from AWS customers and Nvidia's dominance in the sector. BofA analysts also reduced their AMD GPU sales forecast for the next year from $8.9 billion to $8 billion, reflecting a market share of approximately 4%. AMD's stock fell by about 5.6% on Monday, adding to a 2% decline on Friday, and is down roughly 5% for the year. The report noted AWS's preference for custom chips from Marvell and Broadcom, as well as Nvidia products, over AMD's offerings.
Despite these challenges, Bank of America acknowledged that AMD could still find success in the AI chip market due to Nvidia's supply constraints and high pricing, which could position AMD as a viable alternative, particularly for internal cloud workloads. Additionally, AMD's strong position in the server chip market, amid Intel's ongoing struggles, could bolster its prospects. However, an AMD spokesperson did not comment on these developments.
Key takeaways:
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Bank of America downgraded AMD to "neutral" due to higher competitive risk in the AI market.
AWS's low demand for AMD AI chips and Nvidia's market dominance are impacting AMD's growth potential.
AMD's stock dropped significantly following concerns about demand for its AI chips.
Despite challenges, AMD could still find success due to Nvidia's supply issues and its strong position in the server chip market.
