Advanced Micro Devices stock (NASDAQ:AMD) year took a turn for the worst on Oct. 6, when the firm revealed preliminary results for the third quarter of 2022. The chipmaker’s stock dropped more than 13%.
AMD stock (NASDAQ:AMD) has already lost approximately 60% of its value in 2022 due to the current loss and is trading at 52-week lows. Following its steep drop, investors may be enticed to acquire this high-flying chipmaker. Despite the PC market’s difficulties, it is selling at an excellent value and is expected to develop rapidly.
AMD Stock: There are some bright spots.
Though AMD’s latest sales prediction of $5.6 billion for Q3 is a significant decrease from its previous estimate, its top line is still on pace to climb 29% year over year. Of course, this is a significant decrease from the previous estimate of 55% top-line growth, nevertheless it’s crucial to remember that the company can generate reasonable growth despite the PC market’s difficulties.
AMD’s revenue from the client processor division, including sales of CPUs (central processing units) used in desktops and laptop computers, fell 40% yearly to $1 billion. AMD also observed a decrease in the average selling price of its processors last quarter, which will reduce its non-GAAP gross margin to 50% from the earlier target of 54%.
“Macroeconomic circumstances generated weaker than projected PC demand and a large inventory adjustment throughout the PC supply chain,” said CEO Lisa Su. The good news is that AMD’s diverse industries allowed it to overcome this to a large degree.
For example, AMD’s data center revenue climbed 45% year on year to $1.6 billion in the fourth quarter. Furthermore, despite the slowdown in the graphics card industry, the company’s gaming revenue increased by 14% to $1.6 billion. The embedded division also generated $1.3 billion in sales, thanks to the purchase of Xilinx earlier this year.
So it wasn’t all bad news for AMD last quarter. Investors will now look forward to November 1, when AMD will reveal its full third-quarter earnings, with all eyes on the outlook. Don’t be shocked if the business provides a bleak forecast; according to IDC, the PC industry will drop by 12.8% this year. The situation is predicted to improve marginally in 2023, with PC and tablet sales dropping just 2.6% before recovering in 2024.
An appealing Stock, but investors must be patient.
AMD stock (NASDAQ:AMD) is now priced at less than 25 times trailing profits and just 12 times projected earnings. This is close to the Nasdaq 100’s trailing P/E ratio of 24 and a significant discount to the index’s forecast earnings multiple of 21.
Analysts continue to forecast a significant increase in the company’s profits. However, the dismal PC market and poor attitude in the semiconductor business may cause AMD stock to fall, giving investors a chance to purchase the company at a lower price.
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Author Okoro Chinedu 
