Advanced Micro Devices (AMD) Rating Downgraded by Bernstein, Yet Growth Opportunities Remain
Summary
Bernstein downgraded Advanced Micro Devices (AMD) to "Reduce" despite the company's strong Q1 2025 gross margin of 53.7% and promising growth prospects. AMD's new GPU products for data centers and robust demand for Ryzen CPUs are key drivers. The company's consistent performance under CEO Lisa Su and its attractive valuation suggest continued potential, even as it competes with Nvidia in the data center market.
Advanced Micro Devices (AMD) Navigates Downgrade Amidst Strong Growth Prospects
Related Stock: AMD Publication Date: 2025-07-01 04:07:20
Bernstein has adjusted its rating for Advanced Micro Devices (NASDAQ:AMD) to "Reduce," despite the company's robust performance and promising growth trajectory. As of the rating change on June 30, 2025, AMD's stock was trading at $141.90. This downgrade comes even as AMD demonstrates significant potential, particularly with its new GPU products targeting the expanding data center market in the latter half of the year.
While Nvidia currently dominates the AI-driven data center accelerator market, AMD is actively pursuing its own growth opportunities. Management expresses optimism regarding the new product lineup, anticipating these offerings will serve as a catalyst for stock performance. Under CEO Lisa Su's leadership, AMD has consistently surpassed expectations.
AMD has reported a fifth consecutive quarter of gross margin improvement, reaching 53.7% in Q1 2025. This upward trend is primarily driven by strong demand for high-end Ryzen processors and data center products, which have contributed to higher average selling prices (ASPs) and a more favorable product mix. The company projects a gross margin of approximately 54% for the second quarter, excluding an $800 million charge related to MI308 export controls.
The sustained demand for Ryzen CPUs in both gaming and commercial PC segments is a key factor in this positive product mix, supporting ongoing margin expansion. Furthermore, the data center segment, encompassing EPYC CPUs and Instinct GPUs, continues to bolster AMD's financial results. Despite Nvidia's market leadership, AMD's recent data center chips are gaining considerable traction. The company has also steadily increased its PC market share against Intel over several years.
Currently, AMD trades at a conservative valuation, presenting an attractive risk-reward profile for investors, even without the need for multiple expansion. The stock's current price of $141.90 reflects a decrease of 1.91, or -1.33% in percentage terms. Over the past year, AMD's stock has fluctuated between a high of $187.28 and a low of $76.48. The company's market capitalization stands at approximately $230.08 billion, with today's trading volume at 42.61 million shares.