MW AMD is falling behind, warns this analyst who says other chip stocks are better bets

By Christine Ji

AMD's reliance on third-party networking and a lagging software stack may pose problems for the semiconductor company, according to D.A. Davidson

AMD CEO Lisa Su sees the total addressable market for data centers exceeding $1 trillion by 2030.

Advanced Micro Devices has spent the last decade proving its leadership in the market for central processing units, growing its market share to 25% from just 1% in 2014.

But pulling off a repeat performance in graphics processing units might not be in the cards, even with the current artificial-intelligence boom.

As competitive pressures heat up among AI hardware suppliers, D.A. Davidson analyst Gil Luria said AMD $(AMD)$ is increasingly playing "catch-up." Luria initiated coverage of AMD on Thursday with a neutral rating and a price target of $220.

The issue stems from what Luria said is the lackluster real-world performance of AMD hardware. While AMD's Instinct MI300X and upcoming MI350X chips look respectable relative to NVIDIA's (NVDA) Blackwell architecture on paper, "customers are not buying spec sheets," Luria wrote.

Beyond the GPU itself, high-performance computing also depends on software, networking, memory and other variables. In Luria's opinion, AMD is "meaningfully lacking outside their core hardware capabilities." Competitors Nvidia and Broadcom $(AVGO)$ both have a larger portfolio of offerings. Because of this, the companies can minimize time-to-deployment, while AMD is reliant on third-party networking vendors, Luria added.

Luria also initiated coverage of Broadcom, Taiwan Semiconductor Manufacturing $(TSM)$ and Intel $(INTC)$. TSMC was the lone buy-rated stock, with the others also landing neutral ratings. Luria already had a bullish stance on Nvidia's stock.

For compute-hungry AI labs running clusters of tens or hundreds of thousands of GPUs, even small delays in data transfer can compound and exacerbate inefficiencies. As a result, AMD's actual utilization often runs materially below on-paper specifications, making its cost per computing calculation worse than the competition, Luria wrote.

More: Nvidia's stock gets swept up in software selloff, but this analyst says that makes no sense

Luria speculated that OpenAI, the most "compute-hungry" AI lab, likely ranks Nvidia, Broadcom - and maybe even Amazon.com's (AMZN) Trainium and Alphabet's $(GOOGL)$ $(GOOG)$ tensor processing units - above AMD. This also creates a "negative flywheel" effect where customers become more entrenched with Nvidia's CUDA software. TSMC may also allocate less leading-edge capacity to AMD compared with volume leaders. The uncertainty in the supply timeline, in turn, may make big buyers even more hesitant to bet on AMD as a secondary supplier.

Concerns about AMD's competitive positioning were amplified following the company's Feb. 3 report on its fourth-quarter earnings. While AMD reported above-consensus revenue, the beat was driven by $390 million in China sales, which Wall Street hadn't factored into its estimates.

The results were disappointing in an intense demand environment, as investors wanted to see a more aggressive ex-China revenue beat. AMD shares fell more than 13% the following day.

Read: Why AMD's stock dove to its worst day in years after earnings

Despite these hurdles, AMD's long-term targets remain ambitious. At its 2025 analyst day, CEO Lisa Su projected that the company's data-center total addressable market could exceed $1 trillion by 2030. The company plans to grow its data-center business at a compound annual growth rate of 60% for the next three to five years.

Luria is keeping his eye on the second half of 2026, when a scheduled deployment of M1450 GPUs at OpenAI will serve as the "most important test" of whether AMD can truly compete at the frontier.

-Christine Ji

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February 13, 2026 10:56 ET (15:56 GMT)

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