Why Some Wall Street Analysts Are Concerned About AMD's AI Revenue Despite Strong Results
Bloomberg / Getty Images AMD CEO Lisa Su speaks during the AI Action Summit in Paris, France on Feb. 11, 2025
Advanced Micro Devices (AMD) reported first-quarter results that beat Wall Street's expectations, but some analysts expressed concerns tightening export restrictions to China could harm AI revenue going forward.
Jefferies dropped its price target to $100 from $120, while maintaining a "hold" rating for the stock. "AI growth is the primary metric for the stock and on that front estimates move lower," the analysts said.
On the company's earnings call, CFO Jean Hu said AMD would take a $1.5 billion revenue hit in 2025 related to limits on sales of its chips to China. Overall, AMD projected second-quarter revenue of $7.1 billion to $7.7 billion. Analysts had called for $7.3 billion.
AMD shares were up about 1% at just under $100 in premarket trading Wednesday, close to Jefferies' updated target. Citi analysts maintained a similar $100 target, noting that while AMD's AI revenue is expected to fall in the first half of the year, "almost every other company has its AI business increasing."
Meanwhile, Wedbush moved higher to $120 from $115 and UBS jumped to a more bullish $155 from $150. Wedbush pointed to the success of AMD's compute and gaming segments, which "significantly outperformed" in the quarter.
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