AMD stock was trading at $66.71 as of 12:45 PM EDT.
Due to the ongoing decline in the PC market and “increasing anxiety over data center demand,” Wells Fargo analyst Aaron Rakers lowered his projections for Advanced Micro Devices (NASDAQ:AMD) for the company’s three years. This caused the stock to decline on Wednesday.
Rakers, who rates AMD (NASDAQ:AMD) as overweight, stated that he is “surprised” by the lack of investor interest in the semiconductor business considering that it is well-positioned to continue expanding its market share and that its product plan is being executed well. Rakers asserted that the greater factor impacting investor enthusiasm has been a lack of faith in the sector as a whole.
In pre-market trading on Wednesday, AMD (NASDAQ:AMD) lost 1.6%, dropping to about $67 per share, or 53% below where it was at the beginning of the year. Rakers predicted that unless investors believe that the risks against the stock have decreased, the company’s shares “are likely to continue under pressure.” Rakers, for his part, has a price objective of $130 per share for AMD stock (NASDAQ:AMD)
AMD Stock: Reasons Behind Today’s Huge Drop
Rakers noted that mid-single digit declines in the PC market are predicted for this year and mid-to-high teens for the next year. Additionally, there are “downside risks in AMD’s Data Center segment” as data center concerns grow.
AMD Stock Projections
Rakers consequently reduced his projected 2022 revenue and earnings to $25.5 billion and $4.11 per share from $26.2 billion and $4.32 per share. Additionally, he reduced his projections for 2023 and 2024, moving to $26.6 billion and $29.4 billion in yearly revenue, with $4.13 and $4.75, respectively, in earnings per share.
Rakers claimed that AMD stock (NASDAQ:AMD) is gaining market share in the data center but that there is anxiety over inventories, particularly among the hyperscalers.
In light of worries about sluggish hyperscale [capital expense] dynamics and protracted deal cycles, Rakers stated that AMD’s analysis of data center development and resilience is a critical priority. Rakers calculated that AMD stock (NASDAQ:AMD) held 22% of the server CPU market in the first half of 2022 based on IDC statistics, up from 19% in the second half of 2021 and 13% less than a year earlier.
The group is still set to profit from rising spending, according to Bank of America, which reiterated its buy ratings on Advanced Micro Devices (AMD) and a number of other semiconductor firms involved in cloud computing on Monday.
Featured Image- Megapixl @ Hisdx15
