Northland analysts downgraded AMD for the first time in 11 years. What should investors expect?
The share price has jumped 248% in the last 12 months
Investment banks change ratings on AMD shares ahead of the company's report on May 5 / Photo: Unsplash/Brian Jones
Shares of processor maker Advanced Micro Devices received contradictory comments from two analysts ahead of the company's report, expected on Ma 5. Northland downgraded the stock, while DA Davidson, on the contrary, improved his opinion about them. What should investors do with the shares, which in April showed the longest rally in 21 years?
Details
Northland Capital downgraded shares of AMD to Market Perform ("on par with the market") on Monday, April 27 - for the first time since initiating their analyst coverage with Outperform ("above market") 11 years ago, CNBC reported.
The company attributed the decision to the changed competitive dynamics in the industry. "We started tracking AMD 11 years ago with Outperform ratings and people thought we didn't understand what we were doing. Back then, AMD was catching up with Intel, which was lagging behind TSMC. Now Intel is chasing AMD and TSMC is partnering with Nvidia on AI infrastructure and PCs," the Northland analysts wrote. They see TSMC's partnership with Nvidia as a factor that will constrain AMD's margin growth. In addition, research and development costs remain high and are not expected to decline in the foreseeable future, Northland believes.
DA Davidson took a more optimistic stance on Friday, April 24, upgrading AMD stock from Neutral to Buy, CNBC notes. The bank's analysts believe that structural growth in demand for processors and greater transparency of AMD's role in large-scale construction of data centers support the company's investment appeal.
What about the stock
AMD securities at the end of trading on April 27 fell by 3.8%. However, since the beginning of the year they are in the plus by 56%, and for the last 12 months - by 248%. Investors perceive AMD as one of the key manufacturers of central processing units: in mid-April, TD Cowen analyst Joshua Buchalter called them an "irreplaceable asset" - after the longest rally in 21 years.
Most analysts advise buying AMD stock: it has 45 Buy and Overweight ratings versus 11 Hold (advice to hold), MarketWatch shows. There are no recommendations to sell. Meanwhile, the average target price is $298.15 - down 12% from the closing price on April 27.
This article was AI-translated and verified by a human editor
