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Why Was AMD Trading Lower in Monday’s Pre-Market Session?

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AMD opened in the red on Monday after having a good last week. However, an analyst at Barclays has offered a cautious view on the company, which pulled its stock down in the pre-market trading session on Monday. Let’s take a look at what the analyst has to say.

Advanced Micro Devices, Inc. (NASDAQ: AMD) was trading almost 2% down in the pre-market session on Monday following the release of a Barclays report in which analyst Blayne Curtis has cut the company’s estimates.

The analyst said, “June notebook results missed estimates but the much weaker second-half outlook is the bigger story. AMD is not immune to the slowdown despite the company reiterating its full-year guidance recently.”

Additionally, he has asked investors to avoid the stock until the end markets of several of its products witness price corrections.

Based out of California, AMD makes computer processors and related technologies. Its offerings include embedded system applications, graphics processors, motherboard chipsets, personal computers, microprocessors, embedded processors, and field-programmable gate arrays (FPGA) for servers, among others.

AMD to Report Second-Quarter Results Soon

The multinational company is slated to release its second-quarter results on July 26. The Street’s EPS estimate stands at $1.02, compared to $0.63 reported in the previous year.

AMD expects revenue to lie between $6.3 billion and $6.7 billion in the second quarter, and adjusted gross margin to be around 54%.

In the first quarter, the company reported earnings of $1.13 per share, beating analysts’ estimate of $0.91 per share. The figure was up 117.3% year-over-year.

Revenues grew 71% year-over-year to a record $5.9 billion, and adjusted gross margin came in at 53%, up 660 basis points. First-quarter numbers included the results of Xilinx, the acquisition of which was closed on February 14.

Wall Street Is Cautiously Optimistic about AMD

Despite the analyst’s warning bells, the Street is cautiously optimistic about AMD. On TipRanks, the stock has a Moderate Buy consensus rating based on 17 Buys and nine Holds. AMD’s average price target of $132.27 implies 71.16% upside potential from current levels.

Hedge Funds Are Very Positive

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in AMD is currently Very Positive, as the cumulative change in holdings across all 20 hedge funds that were active in the last quarter was an increase of 9.3 million shares.

Analysts Say Buy, but Curtis Says No to AMD Stock

AMD stock has lost over 47% year-to-date, due to the uncertainty caused by the shortage of semiconductor chips and a fall in demand, which was triggered by the COVID-19 pandemic. Even though analysts are positive about the company and expect chip demand to pick up as enterprises across the world shift their operations to the cloud, Curtis has warned investors who are interested in buying the dip.

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