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AMD drops over 5% in premarket after Q3 sales miss estimates

AMD drops over 5% in premarket after Q3 sales miss estimates
Dino Kurbegovic

Advanced Micro Devices (NASDAQ: AMD) reported their preliminary Q3 2022 results on October 6 after the market close. Revenue came in at $5.6 billion, a 29% year-on-year (YoY) increase, while the firm initially expected a 55% YoY increase.  

The decrease in revenue reflects lower-than-expected Client segment revenue, translating into reduced processor shipments due to weaker PC demand and supply chain disruptions. 

AMD CEO Dr. Lisa Su pointed to macroeconomic conditions as culprits for a weak quarter, expressing belief in the strength of the AMD portfolio. 

“The PC market weakened significantly in the quarter. While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain.”

At the time of writing, the news of lower-than-expected revenue has AMD shares reeling by 5.6% in premarket trading.

AMD premarket data. Source: Nasdaq

AMD chart and analysis 

Both the short-term and long-term trends are negative for AMD, as the shares traded from $62.83 to $85.68 over the past month, staying below all moving averages. Technical analysis shows a resistance zone from $67.86 to $67.94.  

AMD 20-50-200 SMA lines chart. Source. data. See more stocks here.

Analysts rate the stock a ‘moderate buy,’ with the average price in the next 12 months reaching $105.80, 55.93% higher than the current trading price of $67.85. Notably, out of 27 Wall Street analysts, 19 have a ‘buy’ rating, 7 have a ‘hold’ rating, and one has a ‘sell’ rating.

Wall Street analysts’ price targets for AMD. Source: TipRanks  

With the Q3 earnings miss and a recent estimate cut by Aaron Rakers, a Wells Fargo (NYSE: WFC) analyst, AMD seems to be in a wider downtrend. 

Chip shortages, supply chain weakness, and general weakness in the PC market seem like protracted problems for chip makers, suggesting more volatility in AMD could be expected in the near-term.

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