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Advanced Micro Devices Inc AMD Stock Quote

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Morningstar‘s Advanced Micro Devices Stock Analysis AMD

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AMD's Negative Preliminary Results Don't Deter Our Long-Term Positive Outlook; Shares Undervalued

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Advanced Micro Devices announced preliminary third-quarter results after the Oct. 6 close that included revenue of about $5.6 billion, well short of management’s original guidance of $6.7 billion. The primary driver of the shortfall was weakness in the client PC segment (down 53% sequentially and 40% year over year to $1 billion). We had been anticipating a slowdown in PC sales following robust demand in recent years from COVID-19-induced work- and learn-from-home trends. However, AMD had been gaining market share at Intel’s expense, which had enabled it to grow despite a weaker overall PC market. After incorporating the softer third-quarter results and lowering our fourth-quarter revenue assumptions, we are reducing our fair value estimate for narrow-moat AMD to $115 per share from $130.

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Company Profile AMD

Business Description

Advanced Micro Devices designs microprocessors for the computer and consumer electronics industries. The majority of the firm's sales are in the personal computer and data center markets via CPUs and GPUs. Additionally, the firm supplies the chips found in prominent game consoles such as the Sony PlayStation and Microsoft Xbox. AMD acquired graphics processor and chipset maker ATI in 2006 in an effort to improve its positioning in the PC food chain. In 2009, the firm spun out its manufacturing operations to form the foundry GlobalFoundries. In 2022, the firm acquired FPGA-leader Xilinx to diversify its business and augment its opportunities in key end markets such as the data center.

Contact
2485 Augustine Drive
Santa Clara, CA, 95054
T +1 408 749-4000
Sector Technology
Industry Semiconductors
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 25, 2022
Employees 15,500

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