Shares of chip large Superior Micro Units (NASDAQ:AMD) and its semiconductor friends have been clobbered this 12 months as a result of macro challenges, a decline in private laptop demand, and the Biden administration’s not too long ago imposed restrictions on semiconductor exports to China. Whereas most analysts are nonetheless bullish on AMD’s long-term prospects, near-term headwinds are too distinguished to disregard.
AMD’s Numbers Mirror Close to-Time period Strain
AMD spooked its buyers earlier this month when it introduced its preliminary third-quarter numbers. The corporate expects its Q3 income to come back in at $5.6 billion, reflecting 29% year-over-year progress. This progress price is considerably decrease than the practically 55% progress estimate issued by the corporate in August.
AMD blamed its decelerated Q3 progress price on decrease processor shipments in its Shopper phase as a result of weaker-than-projected demand within the PC market and “important stock correction actions throughout the PC provide chain.”
Furthermore, the corporate now anticipates an adjusted gross margin of about 50% in comparison with its earlier estimate of practically 54% as a result of a fall in shipments within the Shopper phase and decrease costs.
On the optimistic facet, AMD reassured buyers about important year-over-year progress within the Information Heart, Gaming, and Embedded segments, in step with the corporate’s estimates.
Is Superior Micro Units Inventory a Purchase?
KeyBanc Capital Markets analyst John Vinh slashed his value goal for AMD inventory to $100 from $130 to account for the dismal Q3 preliminary replace. Nonetheless, Vinh reiterated a Purchase score conserving in thoughts the corporate’s long-term prospects. Vinh acknowledged, “Whereas these outcomes are disappointing, we stay Obese AMD, as we nonetheless anticipate outsized progress long run, led by secular progress and share positive aspects in information middle.”
This week, Deutsche Financial institution analyst Ross Seymore minimize the worth goal to $70 from $80 and maintained a Maintain score on AMD inventory. Heading into Q3 outcomes, Seymore famous that issues over elementary deterioration are “resulting in very bearish investor positioning.”
Total, the Road has a Average Purchase consensus score primarily based on 20 Buys, seven Holds, and one Promote. The typical AMD inventory value goal of $97.50 implies 69% upside potential. Shares have declined practically 60% up to now this 12 months.
Conclusion
AMD’s long-term prospects stay brilliant, given the demand for its chips in information facilities and AI amid speedy digitization. Nonetheless, many analysts slashed the worth goal for AMD inventory following the Q3 replace, reflecting demand issues over the close to time period. Total, Wall Road appears cautiously optimistic about AMD inventory as a result of a difficult enterprise surroundings.
