AMD Chips Face U.S. Export Control: Buy, Sell or Hold the Stock?

Advanced Micro Devices AMD chips, MI308 and equivalents, now face new licensing requirements to export to China. Per Reuters, AMD’s MI308 and NVIDIA’s NVDA H20 artificial intelligence (AI) chips fall under the latest restrictions as the United States looks to maintain its edge in the AI race amid the backdrop of increasing tariffs and trade war. AMD shares were down roughly 7% in pre-market trading, while NVIDIA declined approximately 6% today.

China is an important market for both AMD and NVIDIA. China accounted for 24% of AMD’s 2024 revenues and 13% of NVIDIA’s fiscal 2025 revenues. Hence, the latest export control directive hurts growth prospects in the region as both these U.S. chip providers face significant competition from Chinese companies, including Alibaba, Tencent and ByteDance. Although AMD didn’t offer any comment on the financial impact of the latest restrictions, NVIDIA is set to take a charge of $5.5 billion.

The latest restrictions pose a greater threat to AMD’s top-line growth prospects in the near term. AMD shares have suffered from tech sell-off year to date amid rising fears of a recession following U.S. President Donald Trump’s decision to levy tariffs on top trading partners, including China, Mexico and Canada. Intensifying competition from NVIDIA in data center and AI chip markets has been a concern for AMD, shares of which have dropped 21.2% year to date.

So, how should you play the AMD stock now? Let’s dig deep to find out.

Can a Strong Portfolio Boost AMD Stock’s Prospects?

AMD has been relying on its portfolio of fifth-gen EPYC Turin, fourth-gen and third-gen EPYC processors, as well as Instinct accelerators and ROCm software suite to fight off competition of NVIDIA, shares of which have dropped 16.5% year to date.

AMD Stock Performance

In 2024, AMD’s Data Center revenues accounted for roughly 50% of annual revenues and jumped 69% year over year to $3.9 billion. EPYC instances increased 27% in 2024 to more than 1000, with hyperscalers like Amazon AMZN, Alibaba, Alphabet GOOGL, Microsoft and Tencent launching more than 100 general-purpose AI instances in the fourth quarter of 2024 alone.

AMD delivered more than $5 billion in data center AI revenues in 2024, driven by deployments of MI300X by Meta Platforms and Microsoft. AMD Instinct accelerators saw strong demand from a dozen cloud service providers, including IBM and Digital Ocean, and the company expects this number to grow in 2025. The fifth-generation EPYC processors are now powering Alphabet’s new Google Cloud C4D and H4D virtual machines as well as Oracle Cloud Infrastructure Compute E6 Standard shapes.

AMD has expanded its x86 embedded processor portfolio with the launch of the fifth-generation EPYC family server of processors. Through its embedded EPYC portfolio, AMD supports high-performance compute, high-bandwidth network connectivity and security, and high-performance storage requirements for enterprise and cloud infrastructure.

Rich Partner Base & Acquisitions to Boost AMD’s Prospects

A rich partner base that includes Cisco Systems, IBM, Amazon, Alibaba, Google, Microsoft, Meta Platforms, Dell Technologies and Tencent has been playing a key part in expanding AMD’s footprint.

AMD has been on an acquisitive spree to strengthen its AI ecosystem and bridge the technological gap with NVIDIA in the race for AI dominance. The acquisition of Helsinki-based Silo AI-enhanced AMD’s AI development capabilities. The acquisition of ZT Systems, which provides AI infrastructure to large hyperscale computing companies, enables AMD to simultaneously design and validate its next-generation AI silicon and systems.

AMD 2025 Earnings Estimates Trend Downward

The Zacks Consensus Estimate for AMD’s 2025 earnings is currently pegged at $4.59 per share, down by a penny over the past seven days, indicating year-over-year growth of 38.67%.
 

Advanced Micro Devices, Inc. Stock Price and Consensus

Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote

The consensus mark for 2025 revenues is pegged at $31.72 billion, indicating year-over-year growth of 23.02%.

AMD beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 2.32%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

AMD Stock Overvalued

AMD stock is currently overvalued, as the Value Score of D suggests a stretched valuation at this moment.

The stock is trading at a premium, with a forward 12-month Price/Sales of 4.6X compared with the Zacks Computer Integrated industry’s 2.84X.

Price/Sales Ratio (Forward 12 Months)

AMD Stock: Buy, Sell or Hold?

Despite AMD’s strong portfolio and strategic acquisitions, we believe stiff competition from NVIDIA, export control restrictions and stretched valuation are concerns.

AMD stock is trading below the 50-day and 200-day moving averages, indicating a bearish trend.

AMD Stock Trading Below 50-Day & 200-Day SMA

AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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