The past year was a tough one for Advanced Micro Devices (NASDAQ:AMD), which continued to run badly behind Nvidia in the race for AI chip supremacy.
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While revenues grew and margins increased, AMD could not seem to convince investors it has what it takes to capture the AI magic. Shares were down some 18% for the year, all the more surprising giving the overall bullish sentiment throughout the market (and for tech stocks in particular).
AMD has yet to provide bulls with much cheer in 2025 either, with the stock trading sideways during the first few weeks of the new year. Will AMD be able to turn the tide during the rest of the year?
Don’t count on it, cautions investor Bohdan Kucheriavyi, who remains unconvinced that AMD will succeed in outperforming the market in 2025.
“AMD remains undervalued, but it’s unlikely that its shares will be able to aggressively rebound to its all-time high levels in the foreseeable future,” explains the 5-star investor.
Of course, it is not all doom and gloom, continues Kucheriavyi. AMD delivered robust revenues of $6.82 billion in its last reportable quarter (Q3 2024), representing growth of 17.6% year-over-year. The investor acknowledges that this certainly seems to indicate strong demand for the company’s AI chips.
Major hyperscalers clearly have confidence in AMD’s products as well, adds Kucheriavyi, mentioning that both Microsoft and Meta are utilizing AMD’s AI GPUs.
And yet, there is a big elephant in the room, and its name is Nvidia. As Kucheriavyi states, AMD has simply not been able to emerge out from behind Nvidia’s shadow.
“Despite a relatively good performance in recent quarters, AMD is still unable to take a significant portion of the AI GPU market from Nvidia,” details the investor.
Making matters worse, says Kucheriavyi, some of AMD’s customers are hard at work designing their own AI chips. If these hyperscalers were to successfully switch to their own hardware, the investor notes, this could mean even less opportunity for AMD to shine.
Unable to justify a long position in AMD, Kucheriavyi is reiterating a Hold (i.e. Neutral) rating. (To watch Bohdan Kucheriavyi’s track record, click here)
Wall Street, on the other hand, appears to think that AMD will perform quite well in 2025. With 21 Buy, 10 Hold, and 1 Sell ratings, AMD enjoys a Moderate Buy consensus rating. Its 12-month average price target of $172.24 would yield gains of over 40% in the year to come. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
