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Advanced Micro Devices
stock rose on Wednesday, even as the more-bullish Wall Street analysts rushed to slash their stock price targets after the chip maker provided an underwhelming outlook.
AMD stock (ticker: AMD) jumped 3.5% on Wednesday after the company reported results after the bell on Tuesday. While earnings and revenue came in narrowly ahead of expectations, guidance disappointed. AMD said fourth-quarter revenue would be around $6.1 billion, give or take $300 million, which is right at the lower end of analysts’ estimates for $6.4 billion.
The reaction on Wall Street has been swift, with 15 analysts surveyed by FactSet cutting their price targets on AMD stock. But there remain reasons to be upbeat, with the average price target continuing to imply an upside of more than 30% from Tuesday’s close at $98.50, and the stock is still overwhelmingly rated at Buy.
“We’re most encouraged by the data center results and outlook for both server CPU and GPU, but are lowering estimates to reflect weak embedded/gaming,” trimming his price target to $140 from $160. “We remain Overweight, and see the Dec. 6 launch event for MI300X as the next catalyst.”
“We are firm believers in AMD’s revitalized product road map strategy, and product traction is compelling,” wrote John Vinh of KeyBanc. “Expectations for share gains and growth are high. We’re concerned that any moderate downtick to expectations could add substantial risk to the stock based on valuation levels well above peers.”
The team at KeyBanc noted that they were most encouraged by results from the data center business and the outlook for both server CPU and GPU lines. Nevertheless the analysts trimmed their price target to $140 from $160, and lowered their estimates on the back of weakness in embedded and gaming.
Analysts led by Harsh V. Kumar at Piper Sandler were even more upbeat, maintaining their $150 price target on AMD stock and Overweight rating.
“AMD delivered on Q3 [third quarter] earnings where it matters most in our opinion,” wrote Kumar. “While numbers are moving around, they are mostly from gaming and the embedded business, which are going through an inventory digestion phase. Importantly, growth centers for the company are still very much intact.”
For now, it seems investors agree.
Write to Jack Denton at [email protected]
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