Bernstein states that AMD's AI Chip still lacks competitiveness. While this is not new, AMD now has to deal with a potentially "more aggressive" Intel in the PC Business.
Bernstein Research indicates that $Advanced Micro Devices (AMD.US)$ the AI market is already "lacking competitiveness." Now, the company can no longer sell its AI accelerators to China and is facing new pressures in its personal computer business.
Bernstein Analyst Stacy Rasgon indicated in a report to clients on Tuesday that AMD's core PC Business appears to be affected by channel effects. He noted that client shipments in the first quarter even exceeded the peak during the pandemic bubble, as companies stockpiled components in advance to complete system production and shipping before expected tariffs took effect.
Another imminent issue is that AMD's main competitor $Intel (INTC.US)$ is also experiencing customer stockpiling. But for AMD, "an Intel that is backed into a corner and could be more aggressive remains a threat."
If AMD's customers pre-purchased products in the previous quarter, this means the company may face challenges in the second quarter. Affected by these new export restrictions, Rasgon lowered his revenue and profit expectations for AMD in the second quarter and 2025, although he slightly adjusted his expectations for the first quarter upwards due to PC manufacturers stockpiling chips. AMD will release its first quarter Earnings Reports on May 6.
Unfortunately for AMD, it already has a somewhat fragile AI narrative, Rasgon stated.
He now expects AMD's first quarter revenue to be $7.13 billion, slightly higher than the previous estimate of $7.1 billion, while EPS is still expected to be 93 cents, consistent with FactSet's market consensus.
However, for the second quarter, Rasgon revised his revenue expectation down from $7.38 billion to $6.79 billion. The FactSet market consensus is $7.25 billion. Rasgon pointed out that for AMD, every loss of $1 billion in revenue roughly means a 25 cent decrease in EPS.
For the full year of 2025, Rasgon now estimates revenue to be 28.6 billion USD, down from the previous forecast of 31 billion USD. Considering this spending, the EPS is 3.13 USD, lower than the previously expected 4.24 USD.
Last week, AMD stated that it would account for up to 0.8 billion USD in spending in the second quarter, as the new U.S. export restrictions on China will affect the sales of its MI308 chip. AMD's announcement closely follows a similar one from NVIDIA, which indicated it would account for up to 5.5 billion USD in spending.
Rasgon emphasized that he believes AMD's AI roadmap "remains uncompetitive," whereas NVIDIA's current chip lineup—let alone the upcoming BlackwellUltra and Rubin series products—appears more attractive.
He maintains a "market perform neutral" rating for AMD Stocks with a target price of 95 USD. As of Tuesday, the stock was up about 0.8%.
Editor/rice
