11:14 AM EST, 12/09/2024 (MT Newswires) -- Advanced Micro Devices' ( AMD ) potential to gain market share is limited by higher competitive risks in artificial intelligence against Nvidia's ( NVDA ) "dominance" and increasing cloud preference for custom chips from Marvell Technology ( MRVL ) and Broadcom ( AVGO ) , BofA Securities said Monday.

The brokerage reduced its 2025 AI graphics processing unit outlook for AMD to about $8 billion from $8.9 billion previously, compared with the market consensus of $9.6 billion.

The company's pipeline continues to be behind by more than a year versus Nvidia ( NVDA ) and it lacks a "competitive" networking portfolio, BofA analyst Vivek Arya said in a note to clients. "Recently, [the] largest cloud customer Amazon.com ( AMZN ) , strongly indicated its preference for alternative custom and [Nvidia ( NVDA )] products, but a lack of strong demand for AMD," the analyst added.

BofA said it continues to appreciate AMD's "consistent execution," tailwinds from ongoing issues at rival Intel ( INTC ) , and AMD's participation in the expanding AI market that can help sustain a sales growth trajectory between 15% and 20%.

The firm reduced its 2025 pro forma per-share earnings estimate for AMD by about 6% to $4.43 and its 2026 outlook by 8% to $5.51, compared with market consensus for $5.09 and $7.11, respectively.

BofA downgraded its rating on the AMD stock to neutral from buy and reduced its price objective to $155 from $180.

The company's shares were down 4.6% in recent trading.

Price: 132.29, Change: -6.30, Percent Change: -4.55