Is Advanced Micro Devices (NASDAQ:AMD) Stock Still Attractive, After COVID-19?

Advanced micro-systems (NASDAQ: AMD) the stock is down significantly this year amid rising interest rates and falling demand. AMD and other chipmakers have witnessed a surge in personal computer (PC) shipments driven by the pandemic. However, recent results have reflected lower demand for PC processors now that the COVID lockdowns are over. That said, most analysts remain bullish on AMD due to the strength of its Data Center and Embedded segments.

AMD Focuses on Outlook Beyond PC Market Weakness

AMD’s third-quarter revenue rose 29% year-over-year to $5.6 billion, even as Customer segment revenue fell 40% due to weakness in the PC market. The company benefited from higher revenues from the Data Center, Gaming and Embedded segments. Embedded segment revenue increased from $79 million to $1.3 billion, reflecting the impact of the Xilinx acquisition.

Meanwhile, Data Center segment revenue jumped 45% to $1.6 billion. The company said the third quarter marked the 10th consecutive quarter of disk server processor sales, fueled by strong demand for third-generation EPYC processors. Additionally, the segment benefited from initial shipments of its 4th generation EPYC central processing units (CPUs), dubbed Genoa, to select customers.

AMD is confident about the long-term growth and share gains of its Data Center business based on the broad family of its CPUs, GPUs (graphics processing unit), FPGAs (programmable gate array), adaptive SoCs and processing units. data processing (DPU). ).

The outlook for AMD’s Embedded segment also looks attractive given demand from customers in the automotive, networking, communications, aerospace and defense markets.

AMD expects full-year revenue to grow about 43%, driven by growth in the Embedded and Data Center segments.

What are analysts saying about AMD?

After the third quarter print, Mizuho Securities analyst Vijay Rakesh lowered AMD’s stock price target to $95 from $102 to reflect near-term macro challenges and “investor sentiment.” in the face of a potential slowdown”. The analyst warned that the PC market has yet to bottom.

Nonetheless, Rakesh reiterated a buy rating on AMD shares as he is positive about AMD’s data center segment, with the company moving Genoa into the first half of 2023.

Overall, Street’s Moderate Buy consensus rating for Advanced Micro Devices stock is based on 17 buys and nine takes. AMD’s average price target of $85.62 implies upside potential of 34.1%. Shares have fallen 56% since the start of the year.


AMD stock may remain under pressure in the short term due to weak demand in the PC market. That said, most analysts continue to be optimistic about the company’s long-term prospects based on its strong fundamentals, strong cash flow (operating cash increased 14% to 965 million in the third quarter) and the growth potential of the Data Center and Embedded segments. .


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