AMD (AMD) stock plunged after its weak near-term outlook on data center growth prompted analysts to cut price targets, despite quarterly profits beating estimates.
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In Frankfurt, AMD (DE:AMD) sank over 8% on Wednesday as analysts cut their estimates for the stock based on the data center weakness flagged in last night’s results.
Crucially, AMD’s most important business line is selling chips for data centers, which has seen very strong growth as AI demand has soared, but may face pressure in the wake of DeepSeek and the rise of cheaper Chinese rivals.
While the company reported $3.86 billion in data center sales, up 69% on a year-over-year basis, analysts had expected more than $4.1 billion in sales. AMD said it predicts “strong double-digit percentage revenue and EPS growth” in 2025, but this it seems was not enough for investors or analysts.
Moreover, it anticipates first quarter Fiscal 2025 data center revenue to be down quarter-on-quarter, forecasting a sequential decline of about 7% to $7.1 billion, plus or minus $300 million.
Wall Street Lowers AMD Price Targets
Reacting to the figures, Roth MKM five-star analyst Sujee De Silva lowered his price target on AMD to $140 from $200, while retaining a Buy rating on the shares.
He noted that the company guided for seasonal Q1 sequential decline as expected, with investors already expecting newer products to see growth loaded more in the second half of the year.
Nevertheless, Roth believes the intermediate-term growth opportunity for AMD remains intact, and AMD should also continue to gain share across both its server EPYC processors and client/gaming markets.
Morgan Stanley five-star analyst Joseph Moore had already cut his price target on AMD to $147 from $158 before the earnings release. He believes the next catalysts for growth “feel further out in time.”
Mizuho Securities analyst Vijay Rakesh cut his price target on AMD to $140 from $160, while TD Cowen’s Joshua Buchalter cut from $150 to $135, though both stuck to Buy ratings.
More positively, Barclays on Wednesday maintained its Buy rating and $140 price target on the stock.
Is AMD a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on AMD, based on 15 Buys, eight Holds and one Sell. The average AMD price target of $157.09 implies around 31% upside from current levels. AMD stock has fallen over 30% in the last 12 months.
