AMD Stock Falls Over 3% In Thursday Pre-Market: What's Going On?

The stock of Advanced Micro Devices, Inc. AMD declined 3.48% in the pre-market trading session on Thursday. after being downgraded by Jefferies.

What Happened:  Jefferies has lowered its price target for AMD from $135 to $120, indicating a slight 8.9% rise from Wednesday’s closing price. The analyst also downgraded the stock to Hold from Buy, as per a CNBC report.

Jefferies analyst Blayne Curtis identified the increasing rivalry from Intel Corporation INTC as a key reason for the downgrade. Curtis also mentioned a Jefferies benchmarking study, which showed AMD’s graphics processing units being significantly outpaced by those of Nvidia Corporation NVDA in various open-source models.

Curtis further expects Intel’s incoming CEO to possibly guide the company towards a more adaptable strategy, resulting in the production of “fairly competitive chips” from next year. This change could position Intel as a stronger contender against AMD.

Curtis noted, “The stock has already pulled back significantly, but Street estimates still seem too high, and we see more downside risk than upside potential near-term.”

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Why It Matters: This downgrade comes at a time when the chip industry is grappling with challenges related to traditional silicon. Recently, AMD CEO Lisa Su highlighted the need for rethinking innovation in the industry. The increasing competition, coupled with the need for innovation, could potentially reshape the semiconductor landscape. Su recognized that progress in conventional silicon manufacturing is decelerating. “We have to continue to optimize not just on silicon, but on the package, system, and software,” she added.

The downgrade for AMD stock also comes while the company is under pressure as the U.S. tightens export controls on Chinese firms. The Commerce Department blacklisted over 50 Chinese entities, limiting their access to advanced semiconductors from AMD and NVIDIA. This could affect AMD’s revenue from China, a key market for its high-performance chips.

AMD holds a momentum rating of 15.49% and a growth rating of 66.91%, according to Benzinga’s Proprietary Edge Rankings. The Benzinga Growth metric evaluates a stock's historical earnings and revenue expansion across multiple timeframes, prioritizing both long-term trends and recent performance. For an in-depth report on more stocks and insights into growth opportunities, sign up for Benzinga Edge.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.