Shares of chipmaker AMD (AMD) fell on Friday after an executive at tech and e-commerce giant Amazon (AMZN) stated that Amazon Web Services (AWS) has not seen enough demand for AMD’s AI accelerators to offer them on its cloud platform. Gadi Hutt, the Director of Product and Customer Engineering at Amazon’s Annapurna Labs, noted that AWS prioritizes customer demand, and so far, interest in AMD’s chips has not been strong enough for them to be used.
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An AMD spokesperson declined to address Hutt’s comments directly but pointed to the company’s growing list of customers using its Instinct accelerators, such as Microsoft (MSFT) Azure, Meta (META), Oracle (ORCL), IBM (IBM) Cloud, and others like Tensorwave and Nscale. AMD also highlighted that Meta is exclusively using its Instinct chips for the Llama 3.1 model and that Microsoft has praised the accelerators for their strong price-to-performance advantage for GPT-4 inference on Azure.
Despite AWS’s hesitation, AMD remains optimistic about its AI business. The company recently unveiled its MI325X accelerator, which is set to reach customers this quarter. In fact, AMD raised its 2024 AI accelerator revenue forecast to $5 billion, which was up from an earlier estimate of $4.5 billion.
Analysts Remain Positive on AMD
Although investors were a little sour on AMD stock today, analysts remain positive on the stock. In fact, although investment firm Mizuho recently lowered its price target for AMD from $185 to $180, it continues to rate the stock as a Buy. The firm adjusted its expectations for AMD’s first-quarter and 2025 performance to align more closely with market predictions due to a typical seasonal dip in PC and embedded products after a strong December quarter.
Still, despite these adjustments, Mizuho believes that AMD is still in the early stages of growth in the AI GPU market and remains confident in AMD’s ability to capture more market share in the long run. It is worth noting that the investment firm, which is led by five-star analyst Vijay Rakesh, has a 55% success rate on AMD with a 14% return per rating.
Is AMD a Buy, Hold, or Sell?
Overall, analysts have a Strong Buy consensus rating on AMD stock based on 23 Buys, seven Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After an 8% rally in its share price over the past year, the average AMD price target of $185.26 per share implies 33.7% upside potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
