AMD stock slides on weak guidance: buy the dip?

Advanced Micro Devices Inc (NASDAQ: AMD) is trading down in extended hours even though it reported market-beating results for its first financial quarter.

Why is AMD stock down in after-hours?

The semiconductor stock is being punished for the guidance that came in shy of Street estimates.

AMD sees its revenue to fall between $5.0 billion and $5.6 billion in the current quarter. In comparison, analysts were at $5.5 billion. On CNBC’s “Closing Bell: Overtime”, Wedbush Securities analyst Matt Bryson said:

Year-to-date, AMD stock is still up roughly 30%.

Notable figures in AMD Q1 earnings report

• Lost $139 million that translates to 9 cents per share
• Had $786 million in net income instead a year ago
• Adjusted per-share earnings printed at 60 cents
• Revenue declined 5.0% year-on-year to $5.35 billion
• Consensus was 56 cents a share on $5.31 billion revenue
• Gross margin tanked 300 basis points to 50% in Q1

Data-centre and embedded sales made up more than half of the company’s total revenue in the recent quarter. Bryson added:

Should you buy AMD shares?

Other prominent figures in the earnings press release include $1.3 billion of data-centre sales (roughly unchanged). PC sales brought in $739 million in Q1 (cut in less than half) while gaming sales declined 5.0% year-on-year to $1.8 billion.

Embedded sales jumped 160% to $595 million. Data-centre and PC sales were meaningfully below Street estimates in Q1.

Nonetheless, the Wedbush analyst stuck with his “buy” rating on AMD stock. His $95 price target suggests close to a 15% upside from here.