Followers | 686 |
Posts | 142447 |
Boards Moderated | 35 |
Alias Born | 03/10/2004 |
![](https://investorshub.advfn.com/uicon/35728.png?cb=1539773763)
Thursday, March 10, 2022 10:46:54 AM
By: Investing.com | March 10, 2022
After rallying strongly in 2021, shares of Advanced Micro Devices (NASDAQ:AMD) seem to have lost their mojo. So far this year, the California-based chipmaker lost about 22% of its market value.
![](http://d1-invdn-com.investing.com/content/1e322f937741965c591eadcaafaa78a5.png)
AMD Daily
However, the steep decline makes investors wonder: has this pullback gone too far?
There is no doubt that AMD is not a favorite stock to own when the environment is becoming increasingly hostile for high-growth companies.
The US Federal Reserve is about to reverse its monetary easing at a time when inflation is at a four-decade high level. In addition, the Russian invasion of Ukraine and its impact on the global commodity supply is another shock that could push the global economy into a recession, depressing demand for everything.
But the good news for AMD bulls is that other than these macro risks, the company is firmly on its growth path, consistently taking market share from its biggest competitor Intel (NASDAQ:INTC).
The chipmaker's first-quarter sales outlook is quite strong, indicating that AMD is close to reaching Intel's profitability levels—something that would have been inconceivable just a few years ago.
AMD told investors in February that its gross margin—the percentage of sales remaining after deducting production costs—will be about 51% this year. That's nearly on par with Intel's projection of 53%, a significant turnaround compared to five years ago when Intel boasted a margin of more than 63% and AMD was at 31%.
Moreover, advances at Taiwan Semiconductor Manufacturing (NYSE:TSM), which makes chips on AMD's behalf, are propelling the company's competitiveness in computer, gaming console, and data center spaces, further challenging Intel's long-time leadership.
Strong Demand From Data Centers
That outsourcing strategy helped AMD when Intel suffered a series of manufacturing setbacks, repeatedly falling behind in introducing new chips. After last month's earnings report, AMD Chief Executive Officer Lisa Su told analysts that her company is on track to gain market share as new products become increasingly popular.
AMD data center sales, including chips used by companies such as Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN), doubled last year compared with 2020. In the latest earnings report, AMD said that demand from its cloud customers is increasing, deploying its Epyc server chips in their data centers.
AMD is also the second-largest maker of graphics chips used in add-on cards by PC gamers. It supplies graphics chips used in Microsoft's (NASDAQ:MSFT) Xbox and Sony's (NYSE:SONY) PlayStation. Demand for the two-game consoles "continues to outpace all prior generations," AMD said in slides prepared for its earnings call.
This strength has prompted many analysts to upgrade their forecast on AMD in recent weeks. In an Investing.com poll of 40 analysts, 26 gave an "outperform" rating on the stock, with a 12-month price target that implies 36.15% upside.
![](http://d1-invdn-com.investing.com/content/picc69d820a8ef5640bfa6949965045f312.png)
AMD Consensus Estimates
Source: Investing.com
In a recent note, investment firm Bernstein also upgraded the chip-maker to "outperform" from market-perform, saying that the stock might be too attractive to pass up. Its note says:
"With the combination of continued stellar execution, increasingly bankable earnings power, and a recent sizeable pullback, making valuation (dare we say?) downright attractive, we are, for the first time in almost a decade, pulling the trigger."
Bernstein kept its price target on AMD at $150 per share, which is nearly 43% above where the stock closed on Tuesday, adding:
"Amazingly though, the company's own execution has done nothing but improve. Forward EPS estimates have actually increased by almost 30% since that peak just a few months ago, with more than 100% of the stock's decline attributable to multiple compression with [price to forwarding earnings] down almost 50%."
Bottom Line
Except for macro risks, it seems everything else is going right for AMD. In our view, its current weakness opens a door for long-term investors to build their position. That said, the stock is unlikely to offer the kind of hefty returns that investors made last year when the global economy was on a different path.
Read Full Story »»»
![](http://studentaid.gov/universal-navigation/assets/us_flag_small.png)
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
• DiscoverGold
Recent AMD News
- U.S. Index Futures Modestly Higher Before Key Economic Data Release; Early Closure for July 4th Holiday • IH Market News • 07/03/2024 11:01:33 AM
- Major Averages Close On Firm Note As Stocks Rally After Early Struggle • IH Market News • 07/02/2024 08:44:00 PM
- Honeywell Acquires CAES Systems for $1.9 Billion, Sarepta Therapeutics Surges 34%, Gilead Continues Gains • IH Market News • 06/21/2024 12:00:38 PM
- Trump Media Resells Stocks and Warrants; KB Home Exceeds Q2 Expectations, and More News • IH Market News • 06/20/2024 10:55:11 AM
- AMD to Power AI-Based Smart Parking Solution for Sun Singapore, the Country’s Largest Provider of Smart Parking Services • GlobeNewswire Inc. • 06/19/2024 01:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/18/2024 08:18:09 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/18/2024 08:12:29 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/14/2024 08:03:45 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/13/2024 08:14:12 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/12/2024 08:34:23 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/11/2024 09:40:41 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/10/2024 09:22:35 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/10/2024 08:16:19 PM
- AMD to Present at the UBS Women in Tech Summit • GlobeNewswire Inc. • 06/10/2024 01:15:00 PM
- Apple Showcases AI at WWDC 2024, Nvidia Stock Split Starts Today, and More News • IH Market News • 06/10/2024 11:29:44 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 08:16:25 PM
- AMD to Present at the Nasdaq London Investor Conference • GlobeNewswire Inc. • 06/06/2024 08:15:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/06/2024 08:11:40 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/05/2024 08:27:23 PM
- Economic Worries May Lead To Weakness On Wall Street • IH Market News • 06/04/2024 01:10:54 PM
- AMD Unveils Next-Gen “Zen 5” Ryzen Processors to Power Advanced AI Experiences • GlobeNewswire Inc. • 06/03/2024 03:01:00 AM
- AMD Accelerates Pace of Data Center AI Innovation and Leadership with Expanded AMD Instinct GPU Roadmap • GlobeNewswire Inc. • 06/03/2024 03:00:00 AM
- AMD Extends AI and High-Performance Leadership in Data Center and PCs with New AMD Instinct, Ryzen and EPYC Processors at Computex 2024 • GlobeNewswire Inc. • 06/03/2024 02:59:00 AM
- DJT Stock Falls 6% Post-Trump Conviction; UBS Restructures Senior Management for CEO Succession and More News • IH Market News • 05/31/2024 11:54:10 AM
- Form SD - Specialized disclosure report • Edgar (US Regulatory) • 05/30/2024 08:12:39 PM
Glidelogic Corp. Becomes TikTok Shop Partner, Opening a New Chapter in E-commerce Services • GDLG • Jul 5, 2024 7:09 AM
Freedom Holdings Corporate Update; Announces Management Has Signed Letter of Intent • FHLD • Jul 3, 2024 9:00 AM
EWRC's 21 Moves Gaming Studios Moves to SONY Pictures Studios and Green Lights Development of a Third Upcoming Game • EWRC • Jul 2, 2024 8:00 AM
BNCM and DELEX Healthcare Group Announce Strategic Merger to Drive Expansion and Growth • BNCM • Jul 2, 2024 7:19 AM
NUBURU Announces Upcoming TV Interview Featuring CEO Brian Knaley on Fox Business, Bloomberg TV, and Newsmax TV as Sponsored Programming • BURU • Jul 1, 2024 1:57 PM
Mass Megawatts Announces $220,500 Debt Cancellation Agreement to Improve Financing and Sales of a New Product to be Announced on July 11 • MMMW • Jun 28, 2024 7:30 AM