Once the market action comes to a halt today, Advanced Micro Devices (NADAQ:AMD) will deliver results for the fiscal fourth quarter of 2023 and announce expectations for the coming year.
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Back in December, Morgan Stanley’s Joseph Moore named AMD as a ‘Top Pick’ for 2023, while acknowledging that Q1 also brought with it some risk from hyperscale weakness. Following Intel’s recent disappointing results, Moore thinks that could indeed now be the case.
“That risk does loom a bit larger given the recent upgrades, share price appreciation, and the surprising magnitude of inventory excess at competitor Intel,” Moore said. “We expect near-term weakness in data center to weigh on the 1q outlook, and our initial assumption that the company can guide the full year to roughly consensus numbers might be at risk given Intel issues and new CFO. But the opportunity remains significant.”
Data center risks aside, with PC client, gaming, and embedded numbers “already at reasonable levels,” Moore still believes the full year numbers “look reasonable.” And while Moore also admits that end markets “have been soft,” at the same time, AMD’s competitive position has kept on getting better.
As for the CFO issue, former CFO Devinder Kumar has retired now and Jean Hu – a former CFO at Marvell – has taken his place. Although Moore says there is “some risk that an incoming CFO resets full year guidance at the margin to set a more conservative backdrop,” overall, he views the transition as a “key positive for the stock.”
Explaining his reasoning behind naming AMD a top pick, Moore points out that nearly all chip companies are currently exposed to risk, and AMD still boasts an “intriguing growth narrative trading at the most reasonable price we have seen in a while.”
Overall, most on the Street remain in AMD’s corner; over the past 3 months, the stock has garnered 24 analyst reviews, and these break down 18 to 5 in favor of Buys over Holds, all coalescing to a Strong Buy consensus rating. At $91.82, the average target implies one-year upside of ~23%. (See AMD stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
