Wolfe Research Raises Concerns Over AMD’s AI Sales Visibility and 2025 Guidance
Wolfe Research has expressed significant skepticism about AMD's ability to meet Wall Street's lofty expectations for AI-related sales in 2025. The firm's latest investment note suggests AMD may not be in a position to provide clear guidance, setting the stage for potential concerns in the market and challenges for the stock ahead of its January 2025 earnings report.
Lack of Visibility on AI Sales Targets
Wolfe Research highlights the lack of visibility surrounding AMD’s AI-related sales, which could create a difficult setup heading into 2025. The firm doubts AMD will meet the $10 billion AI-related sales target currently projected by Wall Street. Instead, Wolfe suggests that guidance might fall closer to $7 billion, but even this could drive expectations of future upward revisions—something AMD may not be able to deliver.
"Our best guess is that AMD won’t be in a position to guide AI for CY25 – which will in itself drive concerns."
This lack of concrete guidance could exacerbate investor uncertainty and weigh on the company’s performance in the short term.
In addition to concerns over AI sales, Wolfe Research expects downside risks to Wall Street’s consensus revenue estimates for the first quarter of 2025, citing seasonal slowdowns in the PC market following a strong Q4 2024. Wolfe's forecast for Q1 revenue stands at $7.04 billion, slightly below the Street's estimate of $7.09 billion.
The research firm also predicts a broad-based sales recovery for Xilinx—an AMD subsidiary—only in the second half of 2025, further delaying any potential tailwinds for AMD’s financials.
Competitive Challenges and Market Share Pressure
Beyond financial guidance, competitive pressures remain a critical concern. Bank of America recently flagged the growing threat posed by Arm-based server CPUs, whose market share rose to 7% in Q3 2024, up from <5% in 2023 and ~1% in 2022. This rapid growth could erode AMD’s position in the server market, adding to its challenges.
On a more optimistic note, Rosenblatt Securities maintains that AMD could still achieve double-digit GPU compute market share in 2025, even without a significantly superior product to NVIDIA’s.
In light of these challenges, Wolfe Research has chosen not to provide a specific price target for AMD as it continues to assess the evolving market dynamics. The firm’s rating and estimates remain under review.
With AI sales guidance in question, slowing PC seasonality, and mounting competition, AMD faces a challenging 2025. While the company has significant growth opportunities in AI and GPUs, Wolfe Research’s concerns highlight the delicate balance AMD must strike to meet investor expectations.
What are your thoughts on AMD’s prospects? Do you think the company can exceed expectations in AI, or will competition and market dynamics weigh it down? Share your take in the comments below!
