Advanced Micro Devices is a semiconductor stock that one Piper Sandler analyst thinks is an “excellent” play after earnings season, despite headwinds.
AMD (ticker: AMD) is one of multiple chip companies that reported earnings earlier this month. The company reported an earnings beat for its third quarter but provided disappointing sales guidance for its December quarter as personal computer demand continues to be a problem for the industry. Tech companies like Microsoft (MSFT) and Intel (INTC) — along with AMD — have been hit by weakening PC demand throughout the year.
And it’s not just weak PC demand that has hit the sector.
“Macro deterioration has now become a tangible headwind and its carnage appears to be spreading,” Piper Sandler analyst Harsh Kumar wrote in a research note. “During the quarter, macro issues have continued and are now definitely starting to rear their ugly head on a variety of different end markets with the latest being the industrial sector.”
Some macro weakness other than poor PC demand includes demand weakness in handsets and industrial goods like home appliances, Kumar said.
Despite the weak guidance and demand weakness for AMD, Kumar is still bullish on the stock, and said that it was “an excellent way to play the server uptrend and strength in cloud at a reasonable multiple.” He rates AMD at Overweight with a 12-month price target of $90.
Kumar added that AMD remains a top pick at Piper Sandler as earnings for the company “appear to be bottoming,” PC inventory should clear by the March quarter, its server business is still strong and the company “continues to take share from Intel.”
Multiple analysts have said AMD is taking market share from Intel, including J.P Morgan analyst Harlan Sur and Baird analyst Tristan Gerra.
Shares of AMD were down 0.6% in premarket trading Wednesday to $75.8. Coming into Wednesday trading, the stock has fallen 47% this year.