Nvidia started trading on a split-adjusted basis Monday. The 10-for-1 stock split in shares of Nvidia, the leader in artificial-intelligence chips, took effect Friday after the close of trading. The stock finished Friday at $1,208.88. In trading Monday, shares were down 2%. Coming into Monday’s session, Nvidia has risen 144% in 2024, and has gained 27% since the stock split announcement was made on May 22.
Advanced Micro Devices fell 4% after shares of the chip maker were downgraded to Equal Weight from Overweight at Morgan Stanley and the price target was maintained at $176.
“We like the AMD story, but investor expectations for the AI business still seems too high to us,” said analysts led by Joseph Moore in a note to clients on Monday.
Cutting the stock to equalweight, or neutral, from overweight, Moore and his team said they see upward revision potential for AMD as “limited,” even with a recovery in its core business.
They view AMD’s stock price as expensive relative to other big-cap plays such as Nvidia and Broadcom, “where we have more confidence on upward revisions to AI forecasts.”
Morgan Stanley analysts said investor expectations still haven’t adjusted enough to account for the likely impact Nvidia’s Blackwell Ultra chip launch next year will have on competitors like AMD. Their preference has now shifted to Broadcom as the second-favorite large cap AI alternative.
Moore said their overweight on AMD has been focused on the chipmaker’s core business reaccelerating following big downturn across markets, with AI an extra boost. “Through no fault of their own, AMD is facing a high bar given the supply chain ramp in excess of AMD revenue potential,” they said.
AMD said in late April that it expects $4 billion in AI chip sales this year, from an earlier projection for $3.5 billion. Morgan Stanley’s analysts said the chip maker will likely hit that target this year and grow in 2025, but expectations are running much higher. They explain that have consistently taken the approach to heavily discount the supply chain for AMD when assessing such opportunities.
“The trouble we have is that investor expectations still anchor on supply chain based forecasts that point to a number north of $6bn (400-500k units), despite continued messaging from the company that it takes time to build an ecosystem around a new solution, and that they would be aggressive with builds,” they said.