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  • Writer's pictureRealFacts Editorial Team

Major Developments in AI: AMD Downgrade, Nvidia Stock Split

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Advanced Micro Devices, Inc. (AMD) is a semiconductor company that produces high-performance computer processors used in various devices. Their powerful processors are commonly used in AI workloads due to their computational capabilities and efficiency. On Monday, Morgan Stanley downgraded the AI company from Overweight to Equalweight, setting a price target of $176. This downgrade caused the stock to fall over 4% in intraday trading. 

The downgrade stems from concerns over the high expectations surrounding AMD's AI performance. Morgan Stanley cautions that AMD's valuation already reflects an optimistic outlook on its AI capabilities, suggesting a more measured approach as the stock nears the new price target. Additionally, the firm highlights the competitive landscape, particularly the potential impact of Nvidia (NVDA)'s upcoming Blackwell launch. Morgan Stanley recommends Broadcom Inc. (AVGO) as an alternative investment within the large-cap AI segment.

Elsewhere in the AI world, Nvidia completed a 10-for-1 stock split on Monday, giving investors nine additional shares for every one they already owned. The stock price gained over 1% and was trading around the $123 mark during intra-day trading. With its stock price more than doubling this year, Nvidia is now the third most valuable company in the S&P 500, driven by soaring demand for its semiconductors used in AI applications. 

The stock split aims to make shares more affordable for investors, and as Vidya Ramakrishnan from Investors Business Daily states, "The stock split will build further momentum for the AI chip leader."  Investors should closely monitor developments in AI within major companies, whether they own individual stocks or invest through mutual funds or ETFs. AI has significantly driven market gains in recent years, and the momentum of the market can be greatly influenced by advancements from leading AI companies.


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