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It’s not all bad news for Advanced Micro Devices stock

It’s not all bad news for Advanced Micro Devices stock

It’s not all bad news for Advanced Micro Devices stock

semiconductor company Advanced Micro Devices (NASDAQ:AMD) Stock is down (-52.5%) year on year both underperform Nasdaq (NYSEARCA:QQQ) down (-36%) and Semiconductor Index (NASDAQ:SMH) down (-39%) for the year. Investors fear rising interest rates, global recessionOne strong US dollarhigh inflation, and declining consumer discretionary Expenses are the headwinds that continue to destroy AMD’s business. Although its latest earnings report missed analysts’ estimates because it showed declining growth, the company continues to make profits and maintain double-digit growth rates. This begs the question, if analysts’ expectations had been lower, would the story have been more positive? Has AMD’s earlier success raised expectations too high? Valuation has dropped dramatically as shares now trade at only 17.7X forward earnings compared to GPU competitor Nvidia (NASDAQ:NVDA) Trading at 42X forward earnings. AMD reset the narrative by lowering its Q4 2022 top-line guidance, and shares have risen as a result.

It’s not all bad news for Advanced Micro Devices stock
MarketBeat.com – MarketBeat

Next-gen video game consoles drive gaming growth

whereas NVIDIA warns about the sudden slowdown in videogaming With its Q2 2022 YoY segment revenue down (-33%), it is worth noting that AMD saw 14% YoY growth. AMD has literally taken over the market for console gaming, which is more mainstream than desktop PC gaming. AMD supplies chips for the most popular next-generation video gaming consoles. These revenues are posted under the “semi-custom” section which includes next-generation consoles: Sony PlayStation 5 (NYSE:SNE) which has sold over 25 million units and is still on the open market, Valve Steam Deck and Microsoft Xbox (NASDAQ:MSFT), It does not supply chips for Nintendo Switch (OTCMKTS: NTDOY) either Meta Oculus VR Headset (NASDAQ:META)But there is always potential. While its GPU video card revenue fell like NVIDA’s, its “semi-custom” segment was driven by next-gen video game console sales, driving AMD’s gaming segment revenue by 14% YoY to offset the shortfall. was able to.

Not so bad, is it?

On November 1, 2022, AMD released its fiscal third quarter 2022 results for the quarter ended September 2022. The company reported earnings-per-share (EPS) profit of $0.67 excluding non-recurring items versus consensus analyst estimates. of $0.70, (-$0.03) miss. Revenue rose 29% year-over-year (YoY) to $5.57 billion, beating analyst estimates by $5.65 billion. Non-GAAP operating margin was 50%. Data center segment revenue grew 45% YoY to $1.6 billion, driven by strong sales of its EPYC server processors. The client segment (-40%) fell year-over-year from fewer processor ships stemming from a weaker PC market. Gaming segment revenue climbed 14% YoY to $1.6 billion, thanks to higher semi-custom product sales that offset lower graphics revenue. Embedded segment revenue increased 1,549% year-on-year to $1.3 billion as they included Xilinx embedded products revenue. AMD CEO Lisa Su commented on the conference call, “In sum, we are well positioned to navigate current market dynamics based on our leadership product portfolio, strong balance sheet, and growth in our Data Center and Embedded segments. We have three clear priorities guiding us. First and foremost, we are focused on executing our road map and delivering our next generation of leadership products. Second, we work with our customers and We are also building deeper relationships as we make AMD a fundamental enabler of their success. And lastly, we remain very disciplined in how we manage the business.”

Controlling the narrative and lowering the bar

The company cut its Q4 2022 revenue guidance to grow 14% YoY, coming in between $5.20 billion and $5.80 billion and falling short of consensus analyst estimates of $5.94 billion. The company expects year-over-year and sequential growth for its embedded and data center business and non-GAAP operating margin of 51%. Full-year 2022 revenue is expected to increase approximately 43% from $23.2 billion to $23.8 billion, and non-GAAP gross margin is expected to grow approximately 52%. With the exception of the client aka desktop and notebook PC sales experience standardization After the demand shock due to the pandemic, AMD is delivering double-digit growth across the rest of its segments, including data centers, gaming and embedded. it continues to beat Intel (NASDAQ:INTC) Thanks to your asset-light strategy of outsourcing your chips to keep prices down Taiwan Semiconductor Manufacturing (NYSE:TSM), Sony has also announced that it will increase shipments of its hard-to-find PlayStation 5 for the upcoming holiday shopping Seasons as well as rumors of a PlayStation 5 Pro launch in 2023.

It's not all bad news for Advanced Micro Devices stock

Breakout or Bear Flag on the Menu?

AMD weekly chart shows its descending downtrend channel that began in March of 2022 after breaking through the head and shoulders (HS) neckline at $99.82. AMD was only able to bounce through the neckline on two occasions, peaking at the top of the falling channel trendline and falling just below it to make new lows. The weekly 20-period exponential moving average (EMA) continues to decline with resistance at $76.12, followed by the weekly 50-period MA that overlaps the neckline near $99.82. Shares bottomed out at $54.57 to trigger the weekly market structure low (MSL) above $60.49. The trigger was activated on 24 October, as a narrow rising channel made headway in the Q1 earnings report on November 3 2022. While the earnings report missed analyst estimates, its initial gap was absorbed as buyers sharply pushed the shares back up. Channels picked up as volume. The question now is whether the narrow rising channel within the larger descending channel will continue to rise until a breakout is made above $75 or a third bear flag forms on the Rag pull dropping stocks along the lower trend line of the narrow rising channel. moves back below the downside of $54.57 and move to new swing lows of $54.57.



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