Advanced Micro Devices (AMD) announced preliminary Q3 results on October 6, when the chip giant told investors revenues for the quarter will come in 16% below the prior guidance. As such, the question ahead of the Q3 print today, is not whether the company can beat the forecasts but whether it can signal that the headwinds in the Client segment might be reaching a trough.
Going by the noises made by rival Intel on its earnings call last week, Stifel analyst Ruben Roy is upbeat and continues to view AMD shares positively.
“We believe that INTC’s PC TAM commentary (295 million units in 2022, initial expectations for 270 million to 295 million units in 2023) along with channel inventory commentary indicate that the PC market is potentially nearing a bottom,” the 5-star analyst said. “With INTC set to raise prices across its CCG product portfolio beginning in Q4, we believe that AMD’s Client business is likely to find a bottom in the near-term.”
Elsewhere, there are other metrics which shine a positive light on AMD when compared to its big competitor. Going by the preliminary results, AMD’s Q3 Data Center revenue rose by 8% sequentially and 45% from the same period a year ago. Meanwhile, Intel’s Q3 data center revenue fell 10% quarter-over-quarter and 27% year-over-year, which shows that AMD continues to “gain share” in the data center segment, with Intel even admitting it does not expect to catch up for at least a few more quarters.
And with the next-generation EPYC server CPU Genoa about to launch on November 10 alongside an investor event presentation, Roy thinks data center momentum is “likely to continue” well into 2023 whilst the launch could “potentially be an additional catalyst” for the shares.
Talking of the shares, they’ve endured a miserable time; down 58% on a year-to-date basis; as such, Roy thinks investor expectations for companies with exposure to PCs, remains “muted,” which heading into the Q3 print, presents a “compelling set-up.”
To this end, Roy gives AMD shares a Buy rating along with a $100 price target. Should the figure be met, investors are looking at one-year returns of ~66%. (To watch Roy’s track record, click here)
For the most part, Wall Street agrees with Roy’s call on AMD; based on 19 Buys, 9 Holds and 1 Sell, the stock claims a Moderate Buy consensus view. The analysts see also solid gains ahead; going by the $95.03 average price target, the shares will add ~57% over the next 12 months. (See AMD stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
