12:15 PM EDT, 10/30/2024 (MT Newswires) -- Advanced Micro Devices ( AMD ) posted "solid" Q3 results with projected revenue from AI graphics processing units seen above $5 billion in 2024, Morgan Stanley said in a note Wednesday, adding that the revenue expectations may be "still too high," especially given AMD's ecosystem build-out phase.

"Sequential momentum in AI could be challenging in 2025, in our view, as the company is still building the ecosystem," the investment firm said.

The company's guidance for Q4 remains slightly below consensus, which may temper investor enthusiasm, according to the note.

Morgan Stanley said that AMD's data center segment is a strong growth area, but it faces intense competition in AI, with concerns about maintaining market share in 2025 and scaling up capabilities to match NVIDIA's ( NVDA ) Blackwell system-level offerings by 2026.

The firm slightly lowered its estimates for full-year 2025 EPS based on AMD's forecasted growth rate and the embedded segment's slower recovery.

Morgan Stanley reduced its price target on AMD's stock to $169 from $178 and reiterated its equal-weight rating.

Shares of AMD were down 9.8% in recent trading.

Price: 150.03, Change: -16.22, Percent Change: -9.76