Citi analyst Christopher Danely has maintained a cautious stance on AMD stock with a Hold rating as of May 27. His assessment comes as AMD prepares to launch new AI products, specifically the MI355X and discussions surrounding the MI400. While these launches have the potential to enhance AMD’s position, there is uncertainty about their impact on gross margins and overall revenue.
Investors are particularly concerned about the company’s admission that its current AI products are margin dilutive, prompting a demand for clarity on AMD’s approach to achieving margin neutrality with these offerings. Although AMD possesses certain advantages over rivals like Nvidia—such as using more High Bandwidth Memory (HBM) in the MI355X and featuring an accessible ecosystem through its ROCm software—Nvidia continues to hold a leading position in the AI GPU market.
However, there are some promising developments on the horizon for AMD. The anticipated introduction of the MI355X and MI400 is expected to provide a boost to AMD’s AI business, while a rebound in the high-margin Xilinx segment could enhance profitability later in 2025. Danely has revised the earnings per share estimate for 2025 downward due to a one-time charge relating to export controls but believes that positive sentiment from recent corporate insider activity—where 59 insiders have increased their stock purchases—indicates confidence in AMD’s future.
The outlook remains cautiously optimistic as AMD navigates these challenges, suggesting that smart investment decisions will hinge on forthcoming product performance and margin strategies.