AMD met expectations when it came to revenue and earnings, but lowered its guidance for the remainder of the year. The AMD share price fell 8% on Wednesday but AMD stock is still up 68% from a year earlier.
Does this recent stock drop offer a good opportunity to invest in the company? Here are three things you should know about AMD stock before you decide.
Sales Are Down From a Year Earlier
Advanced Micro Device’s revenue during the second quarter was a bit of a mixed bag. Revenue from computing and graphics reached $940 million which missed estimates of $983 million. Semi-custom revenue was $591 million which topped expectations of $544 million.
And the company’s total revenue reached $1.53 billion, beating estimates of $1.52 billion. This up 20% from the previous quarter but down 13% from a year earlier. CEO Lisa Su said that overall, she’s pleased with the company’s financial performance.
AMD Stock Is a Top-Performing Semiconductor Stock
AMD is one of the best-performing stocks on the PHLX Semiconductor Stock Exchange. And one reason for this is that AMD invests a lot of time and money in developing new and exciting products.
This year, the company released its second-generation Ryzen CPU, which is supposed to be the most powerful desktop processor in the world. The company launched its newest Radeon graphics cards on July 7.
However, AMD does face strong competition in the marketplace. AMD and Nvidia (NASDAQ:NVDA) have a long-term rivalry to see which company can take the graphics card market share.
Unfortunately, AMD often falls short to Nvidia. Nvidia has largely dominated AMD in the GPU market and Intel (NASDAQ:INTC) tends to be more well-known when it comes to the microchip industry.
Analysts Remain Optimistic About AMD Stock
The earnings report was mostly in line with what analysts were anticipating and if the company hadn’t lowered its guidance, it may be a different story. But AMD did lower its expected sales growth to a single-digit percentage.
Analysts were looking for signs that AMD is rebounding and for positive news about the company’s growth going forward. In spite of the tempered outlook, many analysts remain positive when it comes to AMD stock.
33 analysts are currently covering AMD stock and 18 raised their price targets even after the earnings report came out. Investor ratings did seem to be more mixed. 12 analysts gave the stock a buy or overweight rating, 17 had hold ratings, and four gave AMD stock a sell rating.
The company will likely continue to experience a slight fallout from the earnings report but this shouldn’t last long. Thanks to strong company fundamentals and many positive tailwinds, AMD will most likely remain a long-term growth stock.
As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities.
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