- We’re downgrading AMD to sell from hold after 2Q24 results and outlook.
- We think AMD’s AI-related sales will not be able to materially outperform consensus expectations.
- AMD has two things working against it: widening performance gap with NVDA AI GPUs and high market expectations.
- We also still don’t see any catalyst at play to boost PC TAM, and hence we don’t see material outperformance driven by Client sales.
- We see a higher risk profile for AMD in the back end of the year and recommend investors take profits and explore exit points out of the stock.
- We are Tech Stock Pros, veterans in the technology and investment spaces. We run the Investing Group Tech Contrarians where we provide institutional-level company research to individual investors.
We’re downgrading Advanced Micro Devices (NASDAQ:AMD) to a sell from a hold. The company reported its 2Q24 results and outlook late last month, initially causing a surge in the stock price, up +8% the day after, before erasing some of those gains. AMD has been branded as the next big thing in AI since Nvidia (NVDA) showcased the potential of being tapped into the AI market last May; we disagree with this branding and have been waiting for expectations related to AMD’s AI sales to reset, which hasn’t fully happened yet. The lag for any real expectation reset from the buy-side guys, coupled with the widening performance gap between NVDA and AMD’s AI products, cause us to believe AMD holds a higher risk profile in the back end of the year and 1H25, even after management raised its 2024 forecast of AI-related sales by $500M. We recommend investors begin taking profits and explore exit points out of the stock.
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