Reports Q4 2021 results on Tuesday, February 1, after market close
Expected Revenue: $4.47 Billion
EPS forecast: $0.75
When Advanced Micro Devices (NASDAQ:) reports its latest quarterly results on Tuesday, the chipmaker will have to demonstrate after the close that the strong growth that has propelled its stocks soaring over the past two years is still in strength.
The ongoing sell-off of growth stocks has hit AMD stock hard this month, pushing the stock down nearly 30%, roughly double the losses suffered by the benchmark over the same period. Santa Clara, California-based AMD, whose shares closed Friday at $105.24, has been tracking the past two years, buoyed by its market share expansion at a time when closest competitor Intel (NASDAQ:) struggled to bring new chips to market. bring.
AMD expects fourth quarter revenue of $4.5 billion, fueled by the company's computer and graphics segments. That is a growth of 39% compared to the same period a year ago. If the company is able to achieve this acceleration, revenue for the current fiscal year will grow by more than 50%. AMD is also better positioned to outperform when chip shortages hurt many industry players during the COVID-19 pandemic. The distinguishing factor is AMD's long-standing relationship with its key supplier, Taiwan Semiconductor Manufacturing (NYSE:), which operates some of the world's leading chip-manufacturing factories.
Amid a robust sales environment, AMD also manages to control costs to increase profitability. Gross margin was 48% in the third quarter, up from 44% in the same period last year as customers were willing to pay more for the company's chips. It forecast gross margins of 49.5% in the fourth quarter. AMD's rapidly growing market share and track record of exceeding expectations have prompted many top analysts to be optimistic about its stock. Analysts polled by Investing.com, 21 have an "outperform" rating for the stock, while 16 are neutral. an upside potential of 35%.
In addition, AMD is one of the leading chip manufacturers likely to benefit from global companies that plan to increase their capital expenditures to participate in the 'metaverse', the next generation of Internet that will improve social connection and include virtual worlds with real economies. While AMD's fundamentals remain strong, there are some near-term risks that don't warrant another strong rally in the stock this year.
Piper Sandl er, in a recent message to customers, AMD lowered AMD to neutral with a price target of $130 per share. The note read:
“Our downgrade is being driven by a combination of factors: 1) our concerns about a PC market slowdown in 2022, 2) the revenue and growth headwinds from the closing of the Xilinx (NASDAQ:) deal, and 3) the broader market dynamics surrounding high-multiple, high-growth technology stocks.
"Given these three dynamics, we believe there is more downside risk than upside risk at this point."
Bottom Line
AMD stocks are under pressure after a strong rally in the past two years. This pullback is, in our view, a buying opportunity for long-term investors. prospects of the company.
