Advanced Micro Devices (AMD) Stock Is Under the Microscope Ahead of Tomorrow’s Earnings Report

Advanced Micro Devices (AMD) earnings are coming up — and lots of investors will be watching. Scheduled for tomorrow after the closing bell, the earnings release will give investors a better idea of how sustainable the company’s growth rates are. Adding to the pressure is the impressive performance AMD’s stock has seen. As shares are up 138% year-to-date, investors will be looking for a stellar quarter to justify another leg higher.

Rosenblatt analyst Hans Mosesmann expects AMD to deliver modest upside to his 3Q18 $1.7 billion sales and $0.12 non-GAAP EPS estimates, with continued strength in Ryzen and EPYC CPUs offset by seasonality in game consoles and relative weakness in GPUs off of residual crypto issues.

“With game consoles expected to be down 15%-20% based on our assumptions on seasonality, overall 4Q18 sales guide should be down in the 3%-7% range with the wildcard being PC share gains on Intel 14nm shortages and the trajectory of the new 7nm GPU for “computing” (data center/cloud), which may be officially unveiled in early November,” Mosesmann opined.

The analyst continued, “Looking into 2019, we see AMD benefitting from continued execution, share gains in CPUs and GPU “compute”, and a more receptive investor base that has largely been watching from the sidelines in part because Intel hasn’t missed a quarter for many quarters. Next year this dynamic will likely change in the opposite direction for Intel and the direct beneficiaries of an increasingly challenged Intel (regardless of the CEO), are of course AMD, Nvidia and Xilinx.”

Net-net, Mosesmann reiterates a Buy rating on AMD with a price target of $40, which implies an upside of 64% from current levels. (To watch Mosesmann’s track record, click here)

TipRanks suggests optimism with some caution baked into expectations when it comes to Wall Street’s majority perspective on the big AMD machine. Out of 24 analysts polled in the last 3 months, 10 rate a Buy on the chip giant while 12 maintain a Hold, and 2 recommend a Sell. The 12-month average price target stands at $28.73, marking nearly 15% in upside potential from current levels. (See AMD’s price targets and analyst ratings on TipRanks)

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