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AMD: What’s on the Menu for Q3 Earnings

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AMD stands for Analog Micro Devices (AMD) but ahead of earnings, should the company be called EASP – Expect Another Solid Print?

Whether the suggestion trumps the semiconductor giant’s current moniker is debatable, what isn’t up for debate is the company’s outstanding success over the past few years, backed by constant “beat-and-raise” reports.

In predictable fashion, then, heading into next week’s Q3 print (Tuesday, Oct 26, AMC), Susquehanna’s Christopher Rolland tells investors to EASP, anticipating the company will “once again meet/exceed both 3Q results and 4Q guidance.”

“That said,” the 5-star analyst added cautiously, “Given the slowing PC market, we do not expect mgmt to raise their FY top-line guidance as they have done in numerous updates over the last year.”

Nevertheless, with the Street anticipating a “sub-seasonal” quarter – calling for a sequential 6.8% uptick rather than the typical 14.4% increase - another beat-and-raise quarter is in the cards with “strong server gains” once again hogging the limelight.

Rolland’s industry checks point to “continued uptake” for both Rome and Milan at hyperscalers, in addition to the growing appeal of single-socket servers and systems with maximum memory configurations. Google Cloud’s use of EPYC processors in N2D virtual machines should also provide support here.

In Computing, PC shipments and ODM builds “still tracked positive” sequentially despite checks showing a “continued slowdown into year-end.”

Rolland also notes the data indicates AMD has continued to gain market share in the quarter vs. Intel in both desktops and laptops. Additionally, as demand for higher-end enterprise/gaming PCs has grown, so have ASPs (average selling prices).

Rolland does offer another note of caution; since the last print, AMD has significantly outperformed the SOX (up by 31% vs 6%), therefore, to impress investors, the company really needs to execute.

Rolland is impressed enough, however, and there’s no change to his Positive (i.e., Buy) rating or $130 price target, indicating possible share gains of 9% over the next 12 months. (To watch Rolland’s track record, click here)

The rest of the Street, on the other hand, deems the recent share haul as quite sufficient; in fact, the $116 average price target suggests shares will drop by 3% in the year ahead. AMD’s ratings break down as 11 Buys, 3 Holds and 1 Sell, and as such, the analyst consensus views this stock a Moderate Buy. (See AMD stock analysis on TipRanks)

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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.