One semiconductor stock to buy amidst the sector decline

Semiconductor stocks have been in a downtrend this year on fears of a slowdown in consumer spending. But that sell-off, as per a Cowen analyst, has created some remarkable buying opportunities.

Buy AMD stock on the weakness

A name that pops out to him is Advanced Micro Devices Inc (NASDAQ: AMD) that he’s convinced can weather the waning demand. This morning on CNBC’s “TechCheck”, Matt Ramsay said:

In the last PC market correction, AMD had single digit operating margins. But even with a huge correction in this PC market, it’s still printing solid growth on a year-over-year basis with operating margin in the mid-20s.

Earlier in 2022, AMD bought Xilinx for $49 billion that diversified its portfolio and positioned it even better for the future, he added.

AMD stock is down more than 60% for the year at the time of writing.

AMD trimmed its outlook last week

Last week, the Nasdaq-listed firm cited fading demand as it lowered its outlook for the current financial quarter.

Advanced Micro Devices Inc now forecasts $5.6 billion in revenue – down about $1.1 billion from its previous guidance. Still, Ramsay noted:

It was a shock to the system, not the direction necessarily. It’s a quality franchise. AMD has over 50% growth in its server business. It’s probably undervalued but you step in first because I don’t want to is where we are sentiment wise.

His recommendation to buy AMD stock comes with a price objective of $100 a share – about a 75% upside from here.