Northland Downgrades AMD (AMD) to Market Perform, 'we expect AI infrastructure spending to decline in CY27'
(Updated - April 27, 2026 6:48 AM EDT)
Northland analyst Gus Richard downgraded AMD (NASDAQ: AMD) from Outperform to Market Perform with a price target of $260.00.
The analyst comments "We initiated coverage of AMD 11 years ago with an OP, and people thought we were clueless. At the time, AMD was catching up to Intel, and Intel was falling behind TSMC. Now Intel is catching up to AMD and TSMC is partnering with NVDA in AI infrastructure and PCs. We think this limits AMD’s GM expansion, and R&D spending will likely remain elevated. While AMD is a phenomenal Company, the CY27 consensus is likely too high. Downgrading to MP. We expect AMD to beat and raise estimates when it reports next week, but the results will likely not be as robust as Intel's. While AMD will benefit from price increases, we believe AMD needs to continue spending heavily on R&D to catch up with NVDA. AMD’s Non-GAAP GM is currently in the mid-50% range. Whereas INTC is high 30%, low 40%. Intel is becoming more competitive, while INTC likely has a higher cost structure, AMD’s price premium relative to Intel’s is likely to decline. AMD is a fabless company and dependent on TSMC. NVDA is TSMC’s largest customer and is likely to receive a favorable allocation amid very tight supply. Moreover, NVDA uses the supply chain as a competitive weapon, buying up capacity ahead of its competitors, constraining their competitors’ growth. Our conclusion is that AMD results and outlook are going to be good, just not as good as INTC's last week. We believe the CY27 consensus needs to come down, as we expect AI infrastructure spending to decline in CY27. We believe that CAPEX/Cash Flow of the hyperscalers is maxed out, and as OpenAI and Anthropic go public this year, they will demonstrate greater financial discipline. They are already moving away from unlimited free usage toward strict usage caps, token-volume-based pricing, and higher-tier subscriptions. We think this slows AI demand growth. At the same time, construction delays are affecting data center facilities."
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Shares of AMD closed at $347.81 yesterday.