AMD(US:AMD) Benzinga·2025-01-28 21:06Core Viewpoint - Melius Research analyst Ben Reitzes downgraded Advanced Micro Devices (AMD) from Buy to Hold and reduced the price target from $160 to $129, citing a need for a reevaluation after a significant stock increase earlier in 2024 [1] Group 1: Analyst Downgrade and Market Concerns - The downgrade reflects increased caution regarding AMD's long-term prospects in x86 servers and PCs, particularly due to competition from Nvidia's Arm-based CPUs [2] - Reitzes expressed concerns that custom and Nvidia CPUs may further cannibalize AMD's x86 server market, despite current success with AMD's Turin chip [2] Group 2: Revenue and Earnings Estimates - Reitzes adjusted revenue estimates downward for PC and server CPUs, leading to slightly lower operating margins, especially in the Data Center segment [3] - For 2024, AMD's EPS estimate remains at $3.33, with projected revenue growth of 13% year-over-year to $25.6 billion, including a 98% increase in Data Center revenue to $12.9 billion [3] - The fourth-quarter 2024 EPS is estimated at $1.10, with revenue growth of 22% to $7.5 billion, including $1.9 billion from AI GPU sales [4] Group 3: Future Earnings Projections - The 2025 EPS estimate has been reduced to $4.54, reflecting a 19% revenue growth to $30.5 billion, with Data Center growth of 32% to $17 billion [4] - For 2026, the EPS estimate is now $5.75, with revenue growth of 17% to $35.5 billion, including Data Center growth of 24% to $21.1 billion [5] - The 2027 EPS estimate is adjusted to $6.1, with revenue growth of 12% to $39.9 billion, including Data Center growth of 18% to $24.9 billion [6] Group 4: Current Stock Performance - AMD stock is currently down 0.74%, trading at $114.15 [7]