Key points:
- AMD will report earnings Tuesday
- The company's preliminary results sent its shares lower
- Northland downgraded the stock Monday
Ahead of its third-quarter earnings release on Tuesday, November 1, Advanced Micro Devices (NASDAQ: AMD) was downgraded, with its price target cut by one Wall Street analyst.
In early October, AMD reported preliminary results, which saw the semiconductor company reveal lower-than-expected revenue due to reduced processor shipments, sending its shares 13% lower. The chipmaker said it anticipates revenue to be approximately $5.6 billion, an increase of 29% year-over-year. However, the company previously expected revenue to be around $6.7 billion, or a 55% increase year-over-year. It attributed the lower-than-anticipated results to reduced processor shipments due to a weaker PC market.
On Monday, Northland's Gus Richard downgraded AMD (AMD) to Market Perform from Outperform, lowering the firm's price target on the stock to $60 from $80 per share.
Richard told investors in a research note that the downgrade is based on demand indigenousness to China being “very slow to recover” while AMD's ARM CPU market share gains will continue, particularly in China.
Also Read: How To Buy AMD Shares
In addition, the analyst explains that he believes Intel (NASDAQ: INTC) will likely have access to better transistors in desktop CPUs in 2023 and “at a minimum slow the loss of market share.”
Last week, Stifel analyst Ruben Roy said in a research memo, lowering Intel's price target, that his firm remained on the sidelines as Intel's server market share continues to be ceded to AMD, and there are “numerous moving parts and challenges ahead in 2023,” Roy added.
Furthermore, Wells Fargo analyst Aaron Rakers said that Meta Platforms' stronger-than-anticipated CapEx should be viewed as a positive for firms such as AMD, Arista (NYSE: ANET), and Nvidia (NASDAQ: NVDA). On AMD, he said Meta's significant CapEx should be considered a net positive for AMD.
According to TipRanks, out of 29 analysts, 20 have Buy ratings on AMD, eight have Hold ratings, and one has a Sell rating on the stock.