Key Takeaways

Advanced Micro Devices ( AMD ) shares lost ground Thursday as Jefferies analysts downgraded the stock, saying they expect the performance gap between AMD's latest products and Nvidia's ( NVDA ) to widen.

The analysts downgraded AMD's stock to a "hold" and cut their price target to $120, down from a "buy" rating and $135 price target previously. That's well below the $139 average target of analysts tracked by Visible Alpha, five of whom have issued "hold" ratings, compared to seven "buy" and one "sell" rating.

AMD shares were down close to 4% near $106 in recent trading Thursday, and have lost more than 40% of their value over the last 12 months.

Jefferies Highlights Nvidia's 'Significant Performance Advantage'

Citing performance tests conducted with three open-source artificial intelligence (AI) models in recent weeks, Jefferies wrote that Nvidia's H200 graphics processing unit (GPU) still has a "significant performance advantage" over AMD's MI300x, and that they expect the gap could "expand further" with Nvidia's Rubin and Blackwell lines.

Nvidia's GPU "outperformed AMD by a wide margin" across most of the analysts' tests. Despite AMD's product having some advertised advantages like higher memory bandwidth, they "do not result in superior real-world performance," the analysts wrote.

They also said "expectations of mounting competition" from Intel ( INTC ) contributed to the downgrade, as they believe Intel could have "fairly competitive chips" by next year under its new CEO .

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