AMD stock catches a downgrade as concerns about China and tariffs heat up

Trump tariffs could travel up 1 of the hottest semiconductor stocks of the past 5 years not named Nvidia (NVDA).

KeyBanc Capital Markets elder probe expert John Vinh slashed his standing connected AI darling Advanced Micro Devices (AMD) to Sector Weight from Overweight connected Tuesday. The telephone is somewhat against the grain, arsenic 64% of the sell-side analysts connected Wall Street complaint AMD a Strong Buy oregon Buy, according to Yahoo Finance data.

Vinh said determination are 3 main factors down his downgrade:

1. Increasing concerns regarding the sustainability of AMD's China AI business. "While near-term request trends are driving accrued request for the MI308 from Chinese hyperscalers, we are progressively acrophobic whether this is sustainable fixed concerns that further export restrictions volition beryllium levied by the U.S.," Vinh wrote.

2. Increasing hazard to gross borderline fixed a imaginable terms warfare with struggling rival Intel (INTC).

3. Limited opportunities to summation further stock compared to Intel and expanding contention fixed the advancement Intel is making connected 18A chips.

AMD banal jumped astir 5% successful aboriginal trading arsenic portion of a broader snap-back rally successful stocks arsenic tariff fears subside, astatine slightest for 1 session.

Read more: What Trump's tariffs mean for the system and your wallet

AMD has pushed backmost connected fears of AI request slowing amid economical uncertainty and nett hazard from tariffs.

"I bash deliberation that determination could beryllium immoderate short-term impacts," AMD CEO Lisa Su told maine successful a Yahoo Finance past week (video above). "I deliberation it's excessively aboriginal to accidental what the longer-term impacts are. I deliberation we person to look astatine however things play retired implicit the adjacent fig of months."

AMD derives 66% of its income internationally. Its cutting-edge chips are manufactured by behemoth Taiwan Semiconductor (TSM). While the Trump medication exempted semiconductors arsenic portion of its tariff push, a planetary commercialized warfare could rise the outgo of accumulation for AMD and its competitors — and apt bleed done to extremity products specified arsenic PCs.

"If you look astatine the baseline, the baseline is we bash privation a much resilient proviso chain. Resilient proviso chains are important for each industry. They're particularly important for the semiconductor industry. We are large supporters of US manufacturing," Su said.

Despite the tariff uncertainty, Su isn't waiting to put successful her business.

AMD this period closed connected its $4.9 cardinal acquisition of ZT Systems. Announced successful August 2024, the woody is expected to bolster AMD's beingness successful compute infrastructure for hyperscalers. ZT Systems counts Microsoft (MSFT) arsenic a cardinal customer, arsenic does AMD.