Oppenheimer analyst Rick Schafer maintained a Perform rating on Advanced Micro Devices, Inc
The analyst remains cautious about AMD's ability to deliver a profitable long-term business model as the second horse in the secularly declining PC market.
He noted that the financially and technologically more robust Nvidia Corp
Schafer noted chasing substantially lower gross margin gaming business further hinders the company's ability to improve profitability. He also flagged structural challenges from Arm Holdings plc .
The analyst projected third-quarter sales and EPS to align with the fourth-quarter consensus at $7.6 billion and $1.17, a tick high. He trimmed the fourth-quarter sales estimate from $7.7 billion to $7.5 billion, mainly on more modest PC and gaming assumptions.
Schafer highlighted AMD's AI event, which divulged a roadmap for the MI family, including MI325 in the fourth quarter of 2024, MI350 in the second half of 2025, and MI400 in 2026. He mentioned that the management increased AMD's AI franchise from nil to ~$4 billion.
However, based on his discussions, initial expectations for ~$8 billion in MI300 sales earlier this year have been reduced to $5 billion. The analyst noted stable PC sales, resumed embedded growth, and server CPU up >25% in calendar 2025. He remained on the sidelines as data center AI expectations remained persistently high.
AMD stock has gained 12% year-to-date compared to the PHLX Semiconductor Sector
The analyst noted an uphill battle for MI300 AI share gains versus Nvidia's dominant accelerator lineup, CUDA software ecosystem, and GB200 rack systems.
Schafer projected third-quarter revenue of $6.70 billion and EPS of $0.91. He expects fourth-quarter revenue of $7.50 billion and EPS of $1.18.
Price Action: AMD stock is down 4.72% at $157.50 at the last check on Tuesday.
