HomeTrading TipsThe Reason for This Week's Decline in Advanced Micro Devices Shares

The Reason for This Week’s Decline in Advanced Micro Devices Shares

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Advanced Micro Devices (NASDAQ:AMD)

Data provided by S&P Global Market Intelligence shows that as of 10:51 AM ET on Friday, shares of Advanced Micro Devices (NASDAQ:AMD) were down 8.9% on the week.

This week, trading in Advanced Micro Devices (NASDAQ:AMD) stock was impacted by both positive and negative developments. Late in the week, the United States government announced a new license requirement to limit the export of high-performance processors to China.

A new set of financial data drove the stock price tumbling in August, undoing much of the July gain. The share price is down 42% so far this year.

What’s the Reason?

In 2021, Advanced Micro Devices (NASDAQ:AMD) Chinese clients were responsible for $4 billion in revenue, or 25% of the company’s overall revenue. The Wall Street Journal reports that AMD doesn’t expect this licensing obligation to significantly impact its company, but it’s unclear how this would influence AMD’s annual revenue.

Gaining market share still presents a massive possibility for increasing sales. At the beginning of the week, Wedbush Securities analyst Matt Bryson was optimistic that Advanced Micro Devices (NASDAQ:AMD) would be able to steal market share from Intel with the release of the Ryzen 7000 series (or “Zen 4” CPUs) for desktop PCs.

What’s Next?

On September 27th, you’ll be able to buy AMD’s brand-new Zen 4 processors. Compared to their predecessors, the latest desktop processors can increase performance for some games by as much as 40%.

Wedbush is optimistic about AMD’s ability to compete with its new product selection. AMD is trying to gain market share by lowering the price of its new high-end Ryzen 7950X chip by $100 in comparison to the previous generation, while Intel has announced its plans to increase pricing for its CPUs.

Management is wary of the near-term demand in the PC market through the fourth quarter due to the decreases in PC sales in the year’s first half. But even so, Advanced Micro Devices (NASDAQ:AMD) is only worth 19 times what analysts predict it will earn in 2022, a figure that appears to factor in the company’s poor sales projections. This price drop appears to be an excellent buying opportunity.

Featured Image – Megapixl © Garrett1984

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