Why AMD Stock Is Sinking Today

Advanced Micro Devices (NASDAQ: AMD) stock is losing ground in Friday's trading. The semiconductor company's share price was down 5.2% as of 11:15 a.m. ET. Meanwhile, the S&P 500 index had fallen 1.6%, and the Nasdaq Composite index had declined 2.1%.

AMD is falling today due to multiple bearish catalysts. In addition to the latest U.S. jobs report causing investors to become more risk averse, the chip specialist's stock is also falling in conjunction with negative analyst coverage.

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AMD stock falls on hotter-than-expected jobs report

The Bureau of Labor Statistics (BLS) has published its latest jobs report, and the results are spurring a wave of selling across the stock market. The report shows that 256,000 jobs were added in December, coming in far ahead of the 155,000 job additions that had been forecast by economists.

The jobs data shows that U.S. economic activity is running hotter than expected and has raised concerns that inflationary pressures could tick up again. Following signs that inflation had been cooling, the Federal Reserve implemented three interest rate cuts last year. These rate reductions helped power bullish momentum for stocks, and investors have been hoping that the central banking authority will continue to serve up cuts this year. While the latest jobs data doesn't mean that the two rate cuts that were expected this year are now off the table, it does paint a significantly less favorable trading backdrop for AMD and other growth stocks.

Goldman Sachs is no longer bullish on AMD stock

In a note published before the market opened today, Goldman Sachs downgraded its rating on AMD stock from buy to neutral. The investment firm also lowered its one-year price target on the stock from $175 per share to $129 per share. While the new price target still implies upside of roughly 6% from the stock's current pricing level, Goldman's lead analyst on the stock is concerned about AMD's competitive positioning.

Analyst Toshiya Hari thinks that AMD can still continue to win market share from Intel in the PC and server markets, but sees rising challenges from Arm. In order to deal with rising competition, Hari thinks AMD may need to spend more. In turn, this is likely to hurt margins and profitability. In addition to competition in the CPU space, other analysts have recently raised concerns about the company's ability to catch up to Nvidia when it comes to high-performance GPUs for artificial intelligence (AI) data centers.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: short February 2025 $27 calls on Intel. The Motley Fool has a disclosure policy.