HSBC Slashes AMD Price Target Amid Concerns Over AI GPU Competitiveness
A major global bank, HSBC, has issued a bearish outlook on AMD, cutting its price target for the semiconductor company by 45% to $110 from its earlier target of $200. This move reflects growing concerns over AMD's ability to effectively compete with NVIDIA in the lucrative and rapidly growing AI GPU market.
HSBC’s Analysis: Lower-Than-Expected AI GPU Momentum
Despite AMD's earlier momentum in the processor market, HSBC analyst Frank Lee notes a significant slowdown in AMD's progress within the AI sector. The analyst attributes this to the lukewarm demand for AMD's MI325 GPU, a product hampered by its use of lower-spec HBM3e memory as Samsung struggles to ramp up production of higher-spec HBM3e modules.
Additionally, while AMD is expected to launch its MI350 GPU in the latter half of 2025, HSBC highlights a critical gap: AMD won’t have an AI rack solution to compete with NVIDIA's NVL rack platform until the release of the MI400 GPU, likely in late 2025 or early 2026.
Market Impact and Investor Concerns
AMD’s stock has already seen a steep 24% correction over the past three months, compared to a 12% decline in the PHLX Semiconductor index. HSBC predicts further downside as the company struggles to meet expectations in the competitive AI landscape.
This bearish sentiment aligns with recent warnings from other Wall Street analysts:
Wolfe Research flagged AMD's inability to provide meaningful AI guidance for 2025.
Bank of America raised concerns about the growing penetration of Arm-based server CPUs, which reached 7% market share in Q3 2024, compared to under 5% in 2023.
AMD’s AI GPU Roadmap: Challenges Ahead
While AMD has its sights set on the MI350 GPU and the MI400 solution in the coming years, it faces significant challenges:
Competitive Disadvantage: NVIDIA’s dominant position with its NVL rack platform and accelerated advancements in AI GPU technologies.
Supply Chain Issues: Reliance on Samsung's HBM3e memory, which continues to face production bottlenecks.
Rising Competition: The increasing presence of Arm-based vendors in the CPU space poses a threat to AMD’s server market share.
While AMD remains a significant player in the semiconductor industry, its delayed and less competitive entry into the AI GPU market is raising doubts among investors. With NVIDIA firmly dominating the AI landscape and Arm-based CPUs gaining traction, AMD faces mounting pressure to deliver innovative solutions quickly.
What do you think of AMD’s chances in the AI GPU race? Can the company regain investor confidence with its upcoming MI350 and MI400 GPUs? Share your thoughts below!
