Bulls vs. Bears: SA analysts weigh in on AMD as stock drops after earnings

SA analysts reviewed their bets on Advanced Micro Devices (NASDAQ:AMD) after the semiconductor giant reported a mixed performance with its Q3 2024 results early this week, sending its shares lower for three consecutive days.

The Santa Clara, California-based tech firm reported $6.8B in revenue for the quarter with ~18% YoY growth, beating the consensus by $110M, as its Data Center segment added $3.5B to the topline, marking over 120% growth.

However, AMD’s non-GAAP net income was in line with expectations despite ~33% YoY growth to roughly $1.5B, driven by approximately 300 basis-point rises seen in both gross margin and operating margin.

Seeking Alpha analysts had mixed views on the company even though its stock lacked sell ratings on the platform amid its underperformance relative to peers Intel (INTC) and Nvidia (NVDA) this week.

The Bulls

“Despite Nvidia’s lead, AMD’s focus on AI data centers offers high growth potential at more attractive valuation multiples,” wrote SA analyst Nelson Alves wrote in “AMD’s Q3 Signals Accelerated AI Push With Record Data Center Revenue.” “Continued AI demand and product cadence could drive re-pricing of AMD stock,”

“Thanks to strong growth in the Data Center, AMD has been able to offset weakness in other parts of the business,” Bill Maurer argued in “AMD: Not Time For Panic (Rating Upgrade).” With decent growth expected in the coming year, this is definitely not the time to panic, and perhaps an opportunity to take advantage of the pullback.

“AMD’s shares should not have skidded 8% in extended trading after the company’s submission of the third-quarter earnings release and Wednesday will likely be weak as well,” added The Asian Investor in “AMD: Why I Am Aggressively Loading Up The Truck.” “AMD’s valuation remains attractive for long term investors, and I see no fundamental reason for investors to sell.”

“Advanced Micro Devices, Inc.’s recent sell-off (over 10%) raises a key question — does ‘buy when others are fearful’ apply?” asked Cash Flow Venue in Advanced Micro Devices Brought Impressive Q3 Results: Buy When Others Are Fearful. “My bullish case for AMD got even stronger with Q3 results and the downward valuation shift.”

The Bears

As AMD had no sell ratings on Seeking post earnings, analysts with hold ratings on the stock issued the following remarks.

“On the back of a -10% post-ER dip, AMD stock looks fairly valued,” SA Investing Group leader Ahan Vashi wrote in “AMD: Su Fumbles, Stock Tumbles, But There’s A Silver Lining (Rating Downgrade). However, “its expected 5-year CAGR of 12.3% is not enough to warrant fresh capital allocation at this time.”

“A further deflation of the stock’s valuation, which has a very high Price to Earnings (PE) Ratio, isn’t out of the question,” Sandeep G. Rao argued in “AMD Q3: Why The Stock Is Falling Despite Earnings Meeting Expectations.” “However, Nvidia’s Q3 earnings are slated to be released in the latter part of November; if Nvidia shows a stilling of growth as well, this is an industry-wide issue and not just AMD’s.”