Berstein analyst Stacy Rasgon says that when Advanced Micro Devices Inc. reports its second-quarter earnings on Tuesday, the company’s AI story “will still probably be all that matters to investors.”
In order to do that, he thinks the company will likely raise its AI revenue forecast again. Will that be enough to help its stock, which has been one of the S&P 500’s
1.10% SPX: The worst performers since July 10?
Rasgon and his team feel that current expectations, which are already high, could go up even more. 0.48%
direction. Another thing he mentioned was “recent newsflow” about possible problems with high-bandwidth memory and the planned retirement of the company’s president, Victor Peng. These were two things he thought were “less than supportive.”
Rasgon said, “Valuation has at least moderated in recent weeks on the sell-off.” AMD shares are now down for the year and trade at about 30 times estimates for future earnings. He wrote, “We feel a bit better here with the shares near our target price, but we are not necessarily ready to take a bigger swing just yet.” He kept his market-perform rating and target price of $140.
Rasgon came to the conclusion that the company’s “burgeoning AI narrative may not be living up to expectations and is somewhat offset by core business weakness.”
As of Thursday night, AMD shares had dropped 6% for the year. However, they’re up about 2% in Friday morning trading as they and the semiconductor industry as a whole try to end three days of losses.
Hans Mosesmann of Rosenblatt also said something about AMD shares on Friday. He also thinks that AMD’s $4 billion-plus full-year revenue estimate for its AI accelerator product will go up, but he added, “It’s important to note that the business is constrained by supply chain limitations.”
But Mosesmann is more optimistic about AMD shares. He says that even though the market is worried about the company’s future competitiveness, he thinks that AMD “will only get relatively stronger” in a market where “edge” and open architecture become more important.
At $250, he thinks the stock is a good buy.
