AMD (AMD) Downgraded to Hold by Erste Group on Margin Concerns

Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the AI Stocks in the Spotlight for Investors. On September 11, Erste Group analyst Hans Engel downgraded the stock from Buy to Hold due to concerns about the company’s operating margins and valuations.

The analysts noted that even though AMD anticipates further growth due to accelerating demand for CPUs and GPUs in data center environments, its operating margin has been lower than the sector average in the recent quarters.

Due to the lack of improvement in operating margins and weak return on equity, the firm cites the current valuation as expensive.

“For 2025, AMD sees further growth based on the increasing demand for high-performance CPUs and GPUs in data center environments. The operating margin in recent quarters is lower than the sector average. The EBIT margin was even slightly negative in the last quarter. In view of the fact that the operating margin has not yet improved and the Group’s below-average return on equity, we rate the current P/E ratio as high.”

Advanced Micro Devices, Inc. (NASDAQ:AMD) develops and sells semiconductors, processors, and GPUs for data centers, gaming, AI, and embedded applications.

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Disclosure: None.