10 AI Stocks on Wall Street’s Radar After DeepSeek Breakthrough

4. Advanced Micro Devices Inc (NASDAQ:AMD)

Number of Hedge Fund Investors: 107

Melius Research recently downgraded Advanced Micro Devices (NASDAQ:AMD) to Hold from Buy based on its bearish outlook on the company’s x86 servers and PCs. The firm believes Nvidia will impact Advanced Micro Devices Inc (NASDAQ:AMD) market share in both x86 servers and PCs with its Arm-based CPUs, which are optimized for accelerated PCs.

“We think Nvidia is going to increasingly ‘come for them’ in both markets with their Arm-based CPUs that are optimized for ‘accelerated PCs,'” said Melius analysts led by Ben Reitzes in a Tuesday note to investors. “Also, we are increasingly concerned that custom CPUs and Nvidia CPUs will cannibalize even more of the x86 server market long-term even though Advanced Micro Devices Inc (NASDAQ:AMD) current chip, Turin, is doing well.”

Melius also lowered its price target for Advanced Micro Devices Inc (NASDAQ:AMD) to $129 from $160.

Reitzes added, “Perhaps now with the rise of DeepSeek and cheaper models that can run on PCs—the desire for real AI-optimized PCs will accelerate [not the Microsoft (MSFT) AI PC]—begging for more integrated Nvidia-based solutions that can run AI apps better.”

White Falcon Capital Management stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q4 2024 investor letter:

“During the year, we sold half of our stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD) and Nu Holdings as they reached their intrinsic values. However, the decline in these stocks toward the end of the year provided us with an opportunity to add to our positions. In AMD’s case, the market has been disappointed by the company’s potential shortfall in AI chip revenues, which were previously forecasted to reach $10 billion in 2025. However, the factors required to justify the investment when the stock is priced at $220 per share are vastly different from those needed when the stock is at $120 per share. Yes, AMD’s AI chips and associated software are not competitive with Nvidia but this is now known and in the valuation. We believe this hyperfocus on AI ignores AMD’s other businesses where they continue to take advantage of Intel’s missteps. Importantly, AMD retains the potential to capture a small share of the AI chip market, which, given the market’s massive size, could be highly impactful for the company.”