Advanced Micro Devices shares moved lower in early Monday trading, extending the chipmaker's second-half slump, but one Wall Street analyst sees significantly more upside than risk heading into 2025.
Advanced Micro Devices (AMD) shares have fallen around 45% since their all-time peak in late spring, shedding around $140 billion in value along the way, as investors and analysts expressed concern that supply-chain issues would continue to tame sales growth across its three major business units.
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The ramp of its newly designed artificial-intelligence chip, the MI300, has faced supply-chain snarls and prevented the group from taking market share from its notably larger rival, Nvidia (NVDA) , as well as from smaller competitors such as Broadcom (AVGO) and Marvell Technologies (MRVL) .
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Broadcom, one of the market's star performers this year, has seen a huge surge in demand for its specialized networking chips.
AMD 'top pick' for Northland
Broadcom also makes what are known as ASIC chips, which help hyperscalers — the large providers of cloud services and infrastructure — move large amounts of data through integrated circuits and ultimately accelerate the speed and reliability with which they process information.
Northland analyst Gus Richard considers AMD "one of our top picks for calendar year 2025" and reiterated his $175 price target and outperform rating in a note published Monday.
"AMD’s AI strategy is driven by its roadmap and total-cost-of-ownership advantages, while its server and client CPU products outperform competitors," Richard wrote.
"We anticipate AMD will continue gaining market share in AI GPUs, server CPUs, and PC clients as the headwinds from embedded and gaming segments subside."
Related: Top analyst revisits Broadcom stock price target amid December surge
Richard sees AI revenue at AMD around $9.5 billion over all of 2025, up 83% from the prior year, a forecast he says "may be conservative as AMD’s MI325X ramps [over the first half of the year] and the hardware competes effectively with Nvidia’s H200."
Non-AI revenue from AMD's data-center segment, meanwhile, could rise 26% to $7.7 billion, with more market share gains, he says. AMD's Turin chips are "showing better performance than Intel’s Granite Rapids in most workloads."
PC-upgrade cycle could be key
Richard also sees AMD taking market share from Intel (INTC) in the personal-computer space, an underrated area of the AI investment thesis. He argues that the "PC-refresh cycle could be stronger than current expectations, presenting significant upside to calendar-year 2025 estimates."
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With Microsoft (MSFT) ending support for its Windows 10 operating system, Ricard sees the potential for around 480 million units, or 40% of the outstanding base, lined up for replacement over the next 18 months.
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"We estimate 2025 client revenue at $7.9 billion, up 15% year-over-year, but this could exceed $9 billion if the replacement cycle materializes as expected," Richard said.
Advanced Micro Devices share were marked 1.7% lower in early Monday trading to change hands at $122.92 each, a move would extend the stock's year-to-date slump to around 11.3%.
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