AMD shares (NASDAQ:AMD) are enjoying a nice lift, climbing over 5% at the time of writing. Bernstein’s Stacy Rasgon pointed out that the PC market seems to be reverting to pre-pandemic conditions. Despite the grim 30% drop in PC shipments year-over-year in Q1, Rasgon emphasizes that this setback only seems dramatic in comparison to the pandemic-induced surge.
He noted that the 40 million notebook units shipped in Q1, while seemingly dismal compared to last year’s 60 million, align perfectly with the pre-COVID Q1 levels. Current forecasts suggest the industry is on track to return to these levels this year. However, it’s not all rosy; Rasgon notes Q1’s CPU channel inventory drain was “ugly,” although less so than Q4, with notebook shipments showing signs of normalizing faster than desktop PCs.
He highlights that notebook CPU shipments lagged behind notebooks by about 10% in Q1, compared to 24% in the previous quarter. CPU average selling prices are still on a downward slide as AMD and Intel work on clearing channel inventory, with AMD seeing a particularly steep 19% sequential decline compared to Intel’s 6%. Rasgon predicts the CPU inventory correction may stretch over another quarter or two, but normalization seems likely in the latter half of the year.
Overall, Wall Street analysts have a Moderate Buy consensus rating on AMD stock based on 18 Buys and eight Holds assigned in the past three months. However, their average price target of $98.77 per share implies 3.57% downside potential.
