AMD stock slides on weak guidance: buy the dip?

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on May 2, 2023
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  • AMD reports market-beating results for its fiscal Q1.
  • Wedbush analyst sees upside in its shares to $95.
  • AMD stock is currently up roughly 30% year-to-date.

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

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Why is AMD stock down in after-hours?

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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:

On the call, I want to hear that the data-centre is going to bounce back and recover through the remainder of the year.

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

Notable figures in AMD Q1 earnings report

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  • 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:

Gross margin at 50% was pretty much where expectations were. As data-centre number hopefully recovers for the remainder of the year, that’ll lift gross margin side of the equation moving forward.

Should you buy AMD shares?

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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.

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