Ahead of its quarterly earnings report on Wednesday, Oct 24 after market close, shares of Advanced Micro Devices (NASDAQ: AMD) fell a decisive 11.12 percent on Oct 19. Investors took the general drop in markets, decline in semitechnology stocks, and a downgrade by an average-rated analyst as excuses to sell the stock.
Even after the single-day drop and monthly decline of 24%, AMD is still expensive on a forward P/E basis. Compared to Intel (NASDAQ: INTC), which awards income investors with dividends, AMD’s growth prospects compensate investors for the valuation. Competitor Nvidia (NASDAQ: NVDA) also trades at elevated valuations.
While investors cannot predict macro moves in the market, they can assess analyst Pierre Ferragu. Per Tipranks, this analyst has a 64% success rate over two years. Overall, he is ranked #1,692 out of 4,891 Analysts on TipRanks (#3,351 out of 11,466 overall experts). The analyst called AMD a 'sell' and set an $18 price target, implying 24% downside. The timing of the report is questionable. One may easily wait until after AMD reports quarterly results and provides guidance for the next quarter and year before deciding on AMD’s worth.
AMD’s GPU division will not likely inspire markets as crypto mining fades. Conversely, EPYC server sales could beat expectations and in PCs, Ryzen 3’s release will get investors bullish on AMD’s prospects.
