Shares of Advanced Micro Devices (AMD) are down at the time of writing after Melius Research downgraded the chipmaker from Buy to Hold due to a lowered outlook for x86 servers and PCs. This decision was not related to DeepSeek but rather a result of increasing competition from Nvidia (NVDA). Indeed, Melius Research believes that Nvidia will gain market share in these areas, particularly with its Arm-based CPUs optimized for accelerated PCs.
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Nvidia’s growing presence in the AI market poses a significant threat to AMD’s position. Custom CPUs and Nvidia CPUs may cannibalize the x86 server market despite AMD’s current success with its Turin chip. As a result, Melius Research slashed its price target on AMD from $160 to $129. which highlights the firm’s concerns about AMD’s ability to compete with Nvidia’s expanding offerings.
In addition, the rise of AI-optimized PCs may end up accelerating demand for integrated Nvidia-based solutions. Nvidia has already entered the AI PC market with Project DIGITS, which is a personal AI supercomputer priced at $3,000. This move could potentially add billions of dollars to Nvidia’s revenue and target a larger portion of the overall PC hardware market that is estimated to be around $220 billion for desktops and notebooks.
Is AMD a Buy, Sell, or Hold?
Overall, analysts have a Moderate Buy consensus rating on AMD stock based on 22 Buys, 11 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 35% decline in its share price over the past year, the average AMD price target of $170.28 per share implies 48.5% upside potential.
