AMD stock price remains in a deep bear market as concerns about the artificial intelligence industry continue. After peaking at $226 in March last year, the stock has plunged by about 50% to the current $113. This article explores why the AMD shares have crashed, and what to expect in the near term.
AMD is gaining market share in AI
Advanced Micro Devices is a top semiconductor company that provides its solutions to customers across various industries. It has a large business in the data center industry, which has become the most important one in the artificial intelligence sector. In this, the company offers solutions like EPYC, Instinct, Alveo, Virtex, and Kintex.
The company also offers its CPU in the client segment, which is made up of computers and PCs. Additionally, it is a leading player in the gaming and embedded segment.
AMD, like NVIDIA, has been in focus in the past few years because of its AI business, which is its main revenue driver now that other segments are slowing. The most recent results showed that AMD’s data center revenue rose by 69% in the fourth quarter to $3.8 billion. This means that it has captured about 10% of the industry so far.
The segment made an operating income of $1.15 billion, up by 74% from the same quarter a year earlier. For the year, the company’s data center revenue rose by 94% to $12.57 billion, and the management expects to see robust growth in the coming years.
AI concerns remain
The challenge, however, is that the AI industry is being disrupted by Chinese companies, which have mastered the science of training advanced models using cheaper chips. A good example of this is DeepSeek, which built advanced models for a negligible amount.
Other Chinese companies like Alibaba and Tencent have all released advanced models without American chips. Therefore, after having robust growth in the past few years, there is a risk that the sector will start to slow soon, affecting its growth.
Analysts have already positioned themselves for this slowdown. The average estimate is that its annual revenue will be $31.75 billion this year, a 23% annual growth. It will then grow by 20% next year and get to $38 billion.
The main hope for AMD is that customers will opt for its GPUs as a viable alternative to those made by NVIDIA.
At the same time, there are concerns about the gaming and embedded busines, whose revenue has slowed lately. The gaming revenue dropped by 58% last year, while the embedded one fell by 46%.
Read more: AMD stock price forecast: set to surge after the $172b wipeout
AMD stock price analysis
The daily chart shows that the AMD share price has been in a strong downtrend in the past few months. It has crashed from last year’s high of $227 to a low of $95.40 this year. This lowest point was notable because it was also the lowest swing in October 2023.
Most recently, the stock formed a descending channel, and has now moved above the upper side of the channel.
There are signs that the stock has formed a falling wedge pattern and a double-bottom whose neckline is at $227. Therefore, there is a likelihood that the stock will bounce back, and possibly hit the key resistance level at $135, followed by $174, the highest point in October last year.
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