Stacy Rasgon explained his dovish view in a research note on Tuesday.
Advanced Micro Devices is currently up nearly 20% versus its YTD low.
Advanced Micro Devices Inc (NASDAQ: AMD) is trading down on Tuesday after a Bernstein analyst turned dovish on the semiconductor behemoth.
AMD stock lacks a meaningful upside
Stacy Rasgon downgraded the AMD stock this morning to “market perform” and lowered his price target to $80. That represents just a 5.0% upside on its previous close.
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His view is based primarily on a slowdown in personal computers as consumer spending shifts from goods to services.
PC environment has grown considerably worse and our belief that AMD would prove relatively more immune to channel degradation proved incorrect, and in recent months, we’ve been growing more wary of potential PC dynamics.
The Bernstein analyst does not expect Advanced Micro Devices to grow its margins as much as expected in the back half of 2023.
Intel is adding to its woes as well
Rasgon agrees that the AMD stock is not very expensive to own. But he’s put off by Intel’s “semidestructive behaviour” that has pushed AMD into announcing deep discounts on its new PC parts.
Intel is using both price and capacity as a strategic weapon, continuing to overship even amid broader breakdowns in the industry (it seems to us that Intel has decided that if the channel will hold parts, it might as well be their parts.
The analyst also noted higher costs as another headwind for Advanced Micro Advances Inc.
AMD is set to report its Q4 results next week. Consensus is for it to earn 52 cents a share this quarter versus 83 cents a share a year ago.
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