AMD Shares Drop Over 6% on Analyst Downgrade
Seaport Research cuts its rating to 'Neutral' from 'Buy,' citing concerns over slowing growth in the company's crucial AI chip business.
Shares of Advanced Micro Devices (AMD) tumbled more than 6% in recent trading following a significant analyst downgrade. The sell-off was primarily triggered after , expressing caution about the growth trajectory of the company's artificial intelligence division.
The research firm's decision was based on supply chain checks that indicated a potential slowdown in AMD's AI accelerator business. This news is particularly concerning for investors, as AMD has positioned itself as a strong competitor to Nvidia in the booming AI chip market, with its Instinct MI300 series accelerators playing a key role in its growth strategy.
Adding to the bearish sentiment were several other market headwinds. A downbeat August employment report signaled slowing economic growth, which could impact overall tech spending. Furthermore, reports that introduced a new competitive threat, potentially reducing reliance on third-party suppliers like AMD and Nvidia in the long term. The renewed discussion of potential tariffs on semiconductor imports also contributed to market uncertainty.
Despite the downgrade from Seaport, many Wall Street analysts maintain a positive outlook on the semiconductor giant. According to a recent report, , viewing it as an under-owned stock with significant growth potential in the AI and data center markets. Firms like Stifel and Bank of America have recently reiterated 'Buy' ratings, with price targets approaching $200 per share. This divergence highlights the current debate between near-term growth concerns and the long-term potential of AMD's position in the AI revolution.