Investing.com -- Wolfe Research downgraded AMD (NASDAQ:AMD) to Peer Perform from Outperform in a note Thursday, citing a reduction in expectations for the company's datacenter GPU revenue in 2025.
Analysts now forecast $7 billion in datacenter GPU revenue for the year, a significant drop from their previous estimate of over $10 billion.
"We now expect $7bn in DC GPU revenue for CY25 vs. our prior expectation of $10bn+," Wolfe Research stated.
They anticipate AMD will not provide guidance for this segment in its upcoming fourth-quarter earnings call.
Wolfe Research's revised outlook follows recent visits to Asia, where ODM build plans indicated only modest quarterly growth for AMD.
"We estimate datacenter GPU revenue in the $1.5-2.0bn range for 4Q and $7bn for CY25," the note explained, adding that this is well below buyside expectations of approximately $10 billion.
The analysts also highlighted challenges in AMD's other segments. They foresee slow PC seasonality with a 17% quarter-over-quarter decline in the client segment for Q1 2025, continued weakness in gaming with a 20% drop, and no immediate recovery in the embedded segment, which may see improvement in the latter half of the year.
However, there is some optimism for AMD’s upcoming MI350 series, expected to launch in the second half of 2025. Wolfe Research noted that this could be a catalyst, offering more substantial redesigns and upgrades than its predecessor.
Overall, Wolfe Research lowered its 2025 revenue and earnings estimates for AMD to $29.9 billion and $4.19 per share, respectively, down from previous forecasts of $33.6 billion and $5.33 per share.