HSBC has downgraded the rating for Advanced Micro Devices (NASDAQ:AMD) from “Buy” to “Reduce,” citing concerns regarding the company’s position in the AI GPU market. The price target has been nearly halved from $200 to $110.

Challenges Facing AMD

1. Weak AI GPU Roadmap
   • Demand for the MI325 GPU has been lower than expected.
   • Delays in launching a competitive AI solution compared to Nvidia’s offerings have raised concerns.
2. Revenue Forecast Revision
   • AI GPU revenue projections for FY25 have been cut to $8.1 billion, significantly below market expectations.
3. Overall Growth Challenges
   • AMD’s overall revenue growth from non-AI segments is forecasted to slow dramatically.

The market response to this news has been notable, with AMD shares falling nearly 3% in premarket trading, reflecting investor reaction to the downgrade.

As AMD navigates these challenges, monitoring its product releases and market positioning will be essential for future assessments of the company’s potential.