AMD stock could end 2024 in the red due to fierce AI chip competition

Semiconductor company Advanced Micro Devices (AMD) is facing headwinds due to weak demand for its artificial intelligence (AI) chips. That’s a blow to AMD investors who had hoped the company would ride the AI ​​chip wave alongside rival Nvidia (NVDA).

Instead, AMD stock has been under constant pressure throughout 2024. That included a 5.57% decline on Monday after Bank of America analyst Vivek Arya, a five-star analyst according to Tipranks ratings, downgraded the company to a neutral rating from a buy rating. He also lowered the company’s price target on AMD shares from $180 to $155. Amazon (AMZN) reports weak demand for AMD AI chips and is partly the reason for the downgrade and lowering of its price target.

Unfortunately for AMD investors, it looks like the company will end 2024 in the red, as shares have fallen 11.22% year-to-date. There will be no major news until the end of the year. Investors will have to wait until February 2025 for the fourth quarter 2024 report and additional insights into the company’s operations this year.

Why can’t AMD keep up with NVDA?

To be honest, Nvidia has beaten AMD with its AI chips and secured a strong position as the market leader. It’s also well ahead of AMD’s offerings and support, showing that AMD wasn’t as prepared for the AI ​​boom as NVDA.

That doesn’t mean AMD is completely out of the race. The company still has several major customers using its AI chips. While Amazon isn’t seeing the demand for AMD’s AI chips that investors were hoping for, Meta Platforms (META) and Microsoft (MSFT) are taking advantage of the company’s offerings. ChatGPT owner OpenAI has also confirmed that it is using some of the chips in its data centers.

Is AMD stock a buy, a sell or a hold?

Looking at Wall Street, the analyst consensus rating for Advanced Micro Devices is Moderate Buy, based on 22 Buy and eight Hold ratings over the past three months. This results in an average price target of $184.33, a high of $220 and a low of $150. This represents a potential upside of 40.85% for AMD stock.

See more AMD analyst ratings

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