Erste Downgrades AMD to Hold; Shares Down 1%, 30‑Day Loss 8% as Analyst Flags Slightly Negative EBIT and Rich P/E
Erste Group analyst Hans Engel downgraded Advanced Micro Devices (AMD) from Buy to Hold, causing shares to drop 1% in early trading. Engel highlighted AMD's slightly negative EBIT margin and operating margins trailing the sector, labeling the stock's P/E ratio as high given its below-average return on equity. Despite a 30-day loss of over 8%, AMD shares remain 30% higher year-over-year. The downgrade emphasizes the need for clearer evidence of higher-margin growth amidst competitive pressures in the data-center GPU market.
Advanced Micro Devices (NASDAQ: AMD) lost roughly 1% in early trade Thursday after Erste Group analyst Hans Engel downgraded the chipmaker from Buy to Hold.
Engel's note put the spotlight on profitability. He argued AMD's operating margins trail the sector and flagged an EBIT margin that was slightly negative in the most recent quarter. At the same time, he called the stock's price-to-earnings multiple rich relative to what he described as a below-average return on equity.
That verdict trimmed some of the wind from AMD's sails after a 2.4% bounce the day before. On a 30‑day basis the shares are off more than 8%, yet they still sit about 30% higher than a year ago - a neat reminder of how quick sentiment can flip in semiconductors.
Fundamentally, AMD has been angling for a bigger slice of the AI and data‑center pie, rolling out higher-performance CPUs and GPUs to chase market share from Nvidia. The question Engel highlighted is whether revenue growth will meaningfully lift margins soon enough to justify the current valuation.
For traders, the downgrade is a data point that accentuates two things: valuation multiples that are sensitive to margin surprises, and the competitive pressure in the data‑center GPU market. Volatility around earnings, guidance, or large data‑center deals could amplify moves in either direction.
Short answer: a margin story versus a growth story, with the market apparently asking for clearer proof that higher-margin mixes are coming. Downside from the downgrade was modest today, but the metric gaps Engel cited are the sort of headaches that can influence nearer-term price swings.
AMD: down ~1% on the downgrade; -8% over 30 days; +30% year-over-year.
