AMD downgraded to "Heck if we know"

Has anyone seen evidence of the hypothesis that a meaningful amount of Nvidia’s demand was double-ordering to try to compensate for tight supply? I swear I remember something like that happening years ago with processors, where demand then reversed and languished for a while,
though I can’t come up with details now. I also reckon that AI demand is stronger than… most phenomena that predate it, at least for a while.

…elevated expectations for AI chip growth has led Northland Capital Markets analyst Gus Richard to admit that he’s not sure where AMD shares should go from here.

“We downgrade on valuation to ‘a heck if we know’ rating,” Richard wrote in a note on Monday. He said he has an actual rating of market perform, which is equivalent to a hold.

Richard’s call is based on his view that investor expectations for AI chip growth have spilled into “irrational exuberance.” He predicts total AI chip revenue of $125 billion in 2027 and says the range of expectations is so great that some analysts are estimating $100 billion and others are at $400 billion.

“AI is big, it’s really big, just not as big as investors are thinking,” Richard wrote.

Richard said overall demand signals were distorted for several reasons. First, market leader Nvidia was effectively a “sole source” for AI chips and demand has been outstripping supply. That led to customers “double ordering,” or buying in advance more than they needed. He also cites recent moves from the U.S. to ban certain chip exports to China as something that could weigh on growth.


That is one thing that has me worried Caromero. Nvdia had that problem when the bitmining collapsed. That was back in 2018 I believe. Hard to know when it is happening because it doesn’t show up on their balance sheet until it is to late.