Advanced Micro Devices Stocks Face Downgrade Amid Market Competition

In a recent update, Goldman Sachs analyst Toshiya Hari has revised his outlook on Advanced Micro Devices (NASDAQ: AMD), downgrading the stock from Buy to Neutral and slashing the price target from $175 to $129.

As of pre-market trading, AMD stocks are priced at $119.67, reflecting a decline of 1.78%. The newly set target suggests only a modest upside from current prices, emphasizing a cautious stance amid competitive challenges.

Goldman Sachs Downgrades AMD Shares

Analyst Hari presents a nuanced perspective, acknowledging AMD's ability to capture market share from Intel within x86-based computing sectors, but also raising concerns over competition in accelerated computing.

The rise of ARM-based custom CPUs and escalating competition could hinder AMD's revenue growth compared to peers, potentially inflating operating expenses and suppressing valuation multiples.

Comparative Performance and Future Outlook

This downgrade underscores AMD's underperformance since joining Goldman Sachs' Buy list in November 2020, with a 50% price rise lacking against the S&P 500’s 72% appreciation.

Factors such as diminished demand for consumer PCs and lagging growth in data center GPU sales contribute to this trend. Analyst Hari expressed concerns that AMD could remain range-bound until market confidence in its growth story is restored.

Technical Analysis of AMD Stock

Trading at the lower end of its 52-week range signals AMD’s struggle against broader market indices. The current price sits precariously near technical resistance at $129.55, with support levels noted between $118.88 and $120.22. The market awaits a recovery in AMD's valuation and growth narrative.