AMD Stock Drops Pre-Market On BofA Downgrade Amid Nvidia, Marvell Competition: Retail Sees Opportunity

Shares of Advanced Micro Devices Inc. (AMD) were down as much as 2% in pre-market trading on Monday after Bank of America (BofA) downgraded the stock, citing increased competition and limited market share potential in the artificial intelligence (AI) sector.

The stock was the second highest trending ticker on Stocktwits before markets opened as retail sentiment around the company improved.

BofA revised AMD’s rating to ‘Neutral’ from ‘Buy’ and cut its price target to $155 from $180. It flagged AMD’s delayed AI product pipeline and the dominance of competitors like Nvidia, Marvell, and Broadcom as key challenges.

The brokerage sees higher competitive risks for AMD in artificial intelligence against the “best-of-breed” Nvidia's dominance and a growing cloud preference for Marvell's and Broadcom's custom chips – all of which limit AMD's potential to gain market share.

It also noted AMD’s AI offerings are a year behind Nvidia’s cutting-edge advancements, putting the company at a significant disadvantage.

Moreover, unlike Nvidia and Broadcom, AMD lacks strong alliances with major cloud hyperscalers like Amazon, Google, Microsoft, Meta, and Oracle, limiting its ability to capture market share.

Amazon is primarily dealing with Nvidia and Marvel, whereas Google prefers Broadcom and Nvidia. 

AMD Sentiment and Message Volume on Dec 9 as of 8:30 a.m. ET | Source: Stocktwits

Despite the downgrade, retail sentiment around the AMD stock flipped to ‘bullish’ from ‘bearish,’ but  many users on Stocktwits are eyeing to ‘buy the dip’ at the opening bell.  

BofA, however, did highlight AMD’s strengths. The company’s strong execution, exposure to the growing AI market, and ability to capitalize on Intel’s ongoing restructuring could sustain revenue growth of 15-20%.

AMD could seize opportunities in the enterprise PC market if it effectively counters competition from Qualcomm.

It also laid the possibility that Nvidia’s AI chip supply constraints and premium pricing could help AMD to maintain its status as a strong merchant GPU alternative.

If pre-market losses hold, it will be the third session of losses for the stock, which is down 1% so far this year. 

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