Advanced Micro Devices (AMD) Rating Downgraded by Bernstein, Yet Growth Opportunities Remain

• Bernstein downgrades Advanced Micro Devices (NASDAQ:AMD) to "Reduce" with a current stock price of $141.90.
• AMD's gross margin reached 53.7% in Q1 2025, marking the fifth consecutive quarter of increase.
• The company's new GPU products for data centers and strong demand for Ryzen CPUs are key drivers for future growth.

On June 30, 2025, Bernstein adjusted its rating for Advanced Micro Devices (NASDAQ:AMD), changing it to "Reduce." At the time of this update, AMD's stock price was $141.90. Despite this rating change, AMD is poised for significant growth, driven by its new GPU products aimed at expanding data centers in the latter half of the year.

AMD is often overshadowed by Nvidia in the AI-driven data center accelerator market, where Nvidia holds a leading position. However, AMD sees ample opportunity for its own growth. The company's management is optimistic about the potential of these new products to act as a catalyst for the stock. Under the leadership of CEO Lisa Su, AMD has consistently exceeded expectations.

AMD has reported a rise in its gross margin for the fifth consecutive quarter, reaching 53.7% in the first quarter of 2025. This increase is attributed to strong demand for high-end Ryzen processors and data center products, which have driven higher average selling prices (ASPs) and a richer product mix. The company anticipates its gross margin to be around 54% in the second quarter, excluding an $800 million charge related to MI308 export controls.

The demand for Ryzen CPUs in both gaming and commercial PCs is contributing significantly to this favorable product mix, supporting the ongoing margin expansion. Additionally, the data center segment, which includes EPYC CPUs and Instinct GPUs, continues to bolster AMD's financial performance. Despite Nvidia's dominance, AMD's recent data center chips are gaining significant traction, and the company has been gradually capturing PC market share from Intel over the years.

Currently, AMD is trading at a conservative valuation, presenting an attractive risk-reward scenario for investors, even without the need for multiple expansion. The current stock price of AMD is $141.90, reflecting a decrease of 1.91, or -1.33% in percentage terms. Over the past year, AMD's stock has reached a high of $187.28 and a low of $76.48. The company's market capitalization stands at approximately $230.08 billion, with today's trading volume at 42.61 million shares.