Morningstar

AMD: Lowering Our Fair Value Estimate Due to China Restrictions and PC Concerns

We expect these issues to mute long-term revenue growth as well.

In this photo illustration, the AMD company logo is seen displayed on a screen.
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Securities in This Article
Advanced Micro Devices Inc
(AMD)
NVIDIA Corp
(NVDA)
Intel Corp
(INTC)

Morningstar’s Metrics for Advanced Micro Devices

Advanced Micro Devices AMD expects to incur up to $800 million in writeoffs associated with its MI308 artificial intelligence products, as the United States has restricted their export to China. These chips were crafted to allow AMD to circumvent prior US restrictions. AI rival Nvidia NVDA is facing similar restrictions.

Why it matters: The US has placed another round of restrictions against selling AI chips into China. Nvidia is the clear AI chip leader today, but a path for AMD to gain ground on its rival within China has been cut off. AI is by far the strongest catalyst for AMD’s growth.

  • AMD reports that China made up 24% of revenue in 2024, based upon the billing location of its customers. This percentage likely includes non-AI products, such as PC CPUs and embedded FPGAs, and the mix of AMD’s emerging AI business in China isn’t clear to us.
  • AMD’s projected AI gains aren’t as strong as what we would have anticipated last year, and China adds another layer of doubt. Meanwhile, tariff uncertainties (at best) and controls (at worst) will likely weigh on PC unit sales and might mute the PC share gains we expect AMD to gain over Intel INTC.

The bottom line: We lower our fair value estimate for narrow-moat AMD to $120 per share from $140 as we cut our AI GPU revenue estimates to exclude China, as well as our global PC revenue expectations. Shares appear undervalued, as AMD’s potential PC share gains still appear underappreciated despite tariffs.

  • We lower our AMD AI GPU revenue estimates in 2025 to $6.5 billion from $7.7 billion. We also lower our estimate for 2025 client (PC) revenue to $7.6 billion from $10.1 billion.
  • Still, we anticipate that AMD will carve out a piece of the AI pie in the years ahead, and we expect the company to remain a winner in the PC CPU space.

Long view: We expect these issues to mute long-term revenue growth as well. We now reduce our 2029 AI GPU and PC CPU revenue estimates to $15.1 billion and $12.0 billion, down from $17.9 billion and $13.3 billion, respectively.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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