Advanced Micro Devices shares moved lower in early Monday trading, extending their notable autumn decline, following a rating and price-target downgrade from a top Wall Street analyst.
The shares have lost around $45 billion in market value since the group issued a muted near-term revenue forecast in late October that followed AMD's (AMD) third quarter earnings update, which suggested supply-chain pressures would keep demand firmly ahead of production over the coming months.
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CEO Lisa Su told investors that MI300 sales could rise to more than $5 billion this year, with overall fourth-quarter revenue in the region of $7.5 billion. Both figures came in shy of Wall Street forecasts.
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That's left some investors worried that the ramp of AMD's flagship AI-powering graphics processing unit, dubbed the MI300, could be delayed into the first half of next year even as the longer-term story remains generationally compelling.
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Bank of America analyst Vivek Arya appeared similarly cautious as he lowered his rating on AMD to neutral from buy and cut his price target $25 to $155 per share.
AMD facing 'higher competitive risks'
In a note published Monday Arya cited "higher competitive risks in AI against best-of-breed Nvidia's (NVDA) dominance and growing cloud preference for custom chips from Marvell and Broadcom, which limit AMD's market share gain potential".
Earlier this month, Marvell Technology (MRVL) shares hit a record high after the chipmaker said demand for its custom AI processors would lift revenue in that key segment past $1.5 billion this year.
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Broadcom (AVGO) , one of the market's star performers this year, has seen a huge surge in demand for its specialized networking chips.
The group 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.
AMD, like its U.S.-based rivals, is also facing the prospect of slumping China sales as trade restrictions between Washington and Beijing escalate.
China-U.S. trade tensions sharpening
Earlier this month, in fact, China banned the exports of key rare minerals used in high-tech manufacturing, while the China Association of Communication Enterprises, an industry group, said U.S. chip supplies were "no longer safe" and prompted companies to source from domestic producers.
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Arya also noted the potential for a correction in AMD's client segment, which includes sales of personal computing chips, following big gains over the second half of this year.
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"On the positive side, we continue to admire AMD's consistent execution, benefits from rival Intel's ongoing turmoil and AMD's participation in the fast-growing AI market that can help sustain a 15%-to-20% top-line growth trajectory," he added.
Advanced Micro Devices shares were marked 3.75% lower in early Monday trading to change hands at $133.36, a move that would extend the stock's six-month decline to around 16.8%.
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