Spooked Advanced Micro Devices Investors Wipe $1.35B Off Shares; Here’s Why

Chip maker Advanced Micro Devices, Inc. (NASDAQ:AMD) this afternoon reported Q3 revenue and profit that topped analysts’ expectations. However, for the current quarter, the company said it expects revenue to decrease approximately 15 percent sequentially, driving its shares down 10% and shaving $1.35 billion off market cap in late trading.

Revenue in the three months ended in September rose to $1.64 billion, yielding EPS of 10 cents per share. Analysts had been modeling EPS of $0.08 on revenue $1.51 billion.

CEO Lisa Su commented, “Strong customer adoption of our new high-performance products drove significant revenue growth and improved financial results from a year ago […] Our third quarter new product introductions and financial execution mark another important milestone as we establish AMD as a premier growth company in the technology industry.”

Q3 2017 Highlights

  • AMD continued driving innovation and competition into the consumer and commercial PC markets with new Ryzen™ processors:
    • Ryzen™ Threadripper™ processors launched for the High End Desktop and workstation marketsAvailable in 8-, 16- and 12-core variants, ThreadripperTM processors are available from over 90 retailers, OEMs, and system integrators worldwide, including in the Alienware Area-51 Threadripper™ Edition gaming PC, BOXX APEXX 4 6301 and NextComputing Edge TR workstations.
    • Ryzen™ 3 CPUs offer exceptional responsiveness and performance at mainstream pricing, completing the Ryzen™ mainstream desktop lineup.
    • RyzenTM PRO desktop solutions have received broad support from top global commercial PC suppliers, including Dell, HP, and Lenovo.
  • AMD expanded its graphics offerings with new consumer, professional, and embedded graphics solutions:
    • Launched the “Vega” architecture-based Radeon™ RX Vega family of GPUs, marking a return to the enthusiast-class gaming segment. These new “Vega” architecture-based GPUs combine cutting-edge capabilities with 8GB of HBM2 memory to deliver up to 13.7 TFLOPS of peak performance.
    • Launched the Radeon™ Pro WX 9100 professional graphics card, delivering up to 12.3 TFLOPS of peak single precision compute performance.
    • Launched the Embedded Radeon™ E9170 Series GPU, which delivers up to 3X the performance-per-watt over previous generations, and is targeted at digital casino games, thin clients, medical displays, digital and retail signage, and industrial systems(2).
  • With new announcements from Amazon Web Services (AWS), and Tencent, AMD enterprise solutions have now been chosen by five of the “Super 7” datacenter and cloud services companies. Previously announced collaborations include Alibaba, Baidu and Microsoft Azure.
    • Amazon Web Services selected AMD RadeonTM Pro MxGPU technology for the new Graphics Design instance type on Amazon AppStream 2.0, which allows users to run graphics-accelerated applications at a fraction of the cost of using graphics workstations.
    • Tencent announced plans to use AMD EPYC™ 7000 series server processors in their datacenters.
  • Atari disclosed that a customized AMD processor featuring Radeon™ graphics technology will power the upcoming Ataribox game console, which is targeted for global launch in spring 2018.


On the ratings front, AMD stockhas been the subject of a number of recent research reports. In a report released yesterday, Deutsche Bank analyst Ross Seymore maintained a Hold rating on AMD, with a price target of $12, which reflects a potential downside of -15% from last closing price. Separately, on the same day, Susquehanna’s Christopher Rolland reiterated a Hold rating on the stock and has a price target of $15.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Ross Seymore and Christopher Rolland have a yearly average return of 29.3% and 9.3% respectively. Seymore has a success rate of 83% and is ranked #29 out of 4705 analysts, while Rolland has a success rate of 64% and is ranked #501.

Overall, 3 research analysts have rated the stock with a Sell rating, 9 research analysts have assigned a Hold rating and 8 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $14.38 which is 0.9% above where the stock opened today.


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