AMD stock falls short of another record while analysts find only ‘nitpicks’ in earnings

Superior Micro Units Inc. shares fell in need of a fifth consecutive file shut Wednesday, after greater than half the analysts protecting the chip maker hiked their worth targets in response to the corporate’s newest sturdy earnings report.


shares, which had been up as a lot as 4% earlier within the buying and selling day, closed down 0.5% at $122.28. Shares final reached a file closing excessive of $122.93 on Tuesday. Wednesday’s optimism stemmed from AMD rising its steerage for the yr late Tuesday, as has been its behavior this yr, and forecasting continued momentum in its growing data-center business.

Of the 40 analysts protecting AMD tracked by FactSet, a minimum of 22 elevated their worth goal on the inventory after the earnings. Bernstein analyst Stacy Rasgon, who has a market carry out score and a $130 worth goal, mentioned AMD as soon as once more delivered “a really clear quarter.”

“We suppose nitpicks (if one have been so inclined) may very well be slight weakening of PC-related revenues, ahead gross margins which might be merely assembly expectations, or worries over deceleration into subsequent yr given the sturdy efficiency seen in 2021.”

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“Potential PC weak spot is no surprise at this level, and AMD has quite a few different drivers to offset, gross margins are nonetheless sitting inside spitting distance of fifty% even amid a lot stronger console gross sales, and 65% YoY development this yr is tough to sneeze at, with development subsequent yr seemingly possible no matter PC tendencies,” Rasgon mentioned.

When Intel Corp.

reported earnings recently, analysts have been very concerned that Intel’s margins were falling regardless of firm assurances they might keep simply above 50% for the subsequent few years. In the meantime, AMD gross margins have been on the rise. AMD reported margins of 48% within the third quarter, up from 44% within the yr in the past interval, however unchanged from 48% within the second quarter.

Cowen analyst Matthew Ramsay, who has an outperform score and a $145 worth goal, provided feedback of an analogous vein to Rasgon.

“One other sturdy & clear beat/elevate with all main buckets of AMD’s income contributing to upside as datacenter gross sales cross 25% of income,” Ramsay mentioned. “Our consolation lies with sturdy server share positive aspects and pragmatism towards the PC market … that means the tendencies that drove 2021’s +65percentgrowth are sustainable.”

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Susquehanna Monetary analyst Christopher Rolland, who has a optimistic score and a $145 worth goal, known as out AMD’s navigation of worldwide provide chain issues as a optimistic.

“Whereas now we have beforehand instructed that AMD is a provide beneficiary
as [Taiwan Semiconductor Manufacturing Co.’s

] most well-liked CPU companion (vs. Intel), the corporate is broadening its provide chain by investing in substrate capability as nicely,” Rolland mentioned. “AMD’s provide prowess might also assist the ‘runaway lead-time’ scenario at Xilinx
the accretive acquisition that administration believes they’re on monitor to shut by the top of the yr.”

Mizuho analyst Vijay Rakesh, who has a purchase score and a $135 worth goal, mentioned he believes “AMD’s provide constraints at TSMC might proceed to offer upside potential to estimates if AMD can safe extra 2022 provide.”

Jefferies analyst Mark Lipacis, who has a purchase score and a $145 worth goal, famous that AMD server CPU revenues elevated by 31% quarter-over-quarter versus Intel’s 1% achieve, and famous one other doable mover for the inventory may very well be lower than two weeks away.

“We expect AMD’s November eighth occasion may very well be one other catalyst for the inventory,” Lipacis mentioned. “AMD is anticipated to disclose its new data-center street map, together with next-gen EPYC CPU and Intuition GPU households.”

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Citi Analysis analyst Christopher Danley mentioned he has a $125 goal and a impartial score on AMD due to the inventory’s worth and that PCs are “cooling off from post-COVID normalcy returning and provide points.”

“AMD server market share elevated 70 foundation factors in 2Q21, nicely above common server market share positive aspects of fifty foundation factors per quarter since 1Q19,” Danley mentioned. “We count on AMD server market share positive aspects to speed up and attain roughly 20.0% in 2022, near its earlier peak in 2006.”

Of the 40 analysts who cowl AMD, 23 have purchase or chubby rankings, 16 have maintain rankings, and one has a promote score, in line with FactSet, with a brand new common goal Wednesday of $133.01 from a earlier $117.55. Prior to now 12 months, AMD shares have gained 55%; as compared, the PHLX Semiconductor Index 

has gained 46%, the S&P 500 index 

has risen 34%, and the tech-heavy Nasdaq Composite Index 

is up 33%. | AMD inventory falls in need of one other file whereas analysts discover solely ‘nitpicks’ in earnings


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