Advanced Micro Devices (AMD) stock is one of the worst S&P 500 stocks Wednesday after the semiconductor company satisfied analysts' expectations for its third quarter, but issued disappointing guidance for its fourth quarter.
In the three months ended September 28, AMD's revenue increased 17.6% year over year to $6.8 billion, boosted by 122.1% growth in its Data Center segment to $3.5 billion. Its earnings per share (EPS) were up 31.4% from the year-ago period to 92 cents.
"We delivered strong third-quarter financial results with record revenue led by higher sales of EPYC and Instinct data center products and robust demand for our Ryzen PC processors," said Advanced Micro Devices CEO Dr. Lisa Su in a statement. "Looking forward, we see significant growth opportunities across our data center, client and embedded businesses driven by the insatiable demand for more compute."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results matched or beat analysts' expectations. Indeed, Wall Street was anticipating revenue of $6.7 billion and earnings of 92 cents per share, according to CNBC.
However, sentiment quickly turned negative when AMD provided its outlook on the fourth quarter. The company said it anticipates revenue of approximately $7.5 billion, plus or minus $300 million, which is in-line with analysts' expectations of $7.54 billion.
"AMD's stock was priced for a beat and raise," Summit Insights analyst Kinngai Chan told Reuters. "Clearly, AMD's outlook was not good enough for investors."
Is Advanced Micro Devices stock a buy, sell or hold?
Advanced Micro Devices has whittled its year-to-date lead to roughly 2% following Wednesday's post-earnings plunge. Still, Wall Street remains mostly bullish on the semiconductor stock.
According to S&P Global Market Intelligence, the average analyst target price for AMD stock is $186.96, representing implied upside of more than 24% to current levels. Additionally, the consensus recommendation is Buy.
However, financial services firm Oppenheimer has a Perform rating (equivalent to a Hold) on the large-cap stock.
"We remain cautious toward AMD's ability to deliver a profitable long-term business model as the second horse in the secularly declining PC market," says Oppenheimer analyst Rick Shafer. "We see financially and technologically stronger Nvidia (NVDA) and market-leading Intel (INTC) strengthening their positions in both CPU and GPU, challenging AMD's revenue and gross margin (GM) trajectory."
What's more, Shafer believes Advanced Micro Devices "faces structural challenges from Arm Holdings (ARM), and with valuation above peers, we view risk/reward as balanced here."
Related Content
-
Stock Market Today: Markets Count Down to Tariff DayInvestors, traders and speculators stand by for updates from Washington, D.C., on new terms of global trade.
-
The Average Monthly Social Security Check: January 2025The average monthly Social Security check amount might surprise you. Here's a look at the numbers and why they matter.
-
Stock Market Today: Markets Count Down to Tariff Day
Investors, traders and speculators stand by for updates from Washington, D.C., on new terms of global trade.
-
Why ETFs Are a Great Bet for the Trump PresidencyStock market volatility has picked up since Inauguration Day. These ETFs can help investors can navigate the ups and down.
-
Planning for Healthcare Costs: How Financial Advisers Can Guide Their ClientsHere are five ways financial professionals can advise clients to take a strategic approach to their healthcare costs today to help safeguard their tomorrow.
-
How Financial Advisers Can Share Their Clients' Good WordsFinancial professionals must follow strict regulations when they use written testimonials and endorsements by their clients to market their business.
-
Adobe Stock's Path to a 100,000% Return Is ImpressiveA little bit of luck and a lot of strategic decision-making has created a massive return for Adobe shareholders.
-
High-Net-Worth Individuals and Estate Planning Under TrumpWe don't know what’s going to happen with taxes. Keeping an eye on these issues is imperative so you can make the appropriate moves at the right time.
-
Preparing for an Inheritance: Don't Let Your Blessing Become a CurseA few practical steps, such as establishing your financial independence and asking questions, can help you avoid inheritance pitfalls.
-
How to Invest Like the Rich (and Pay Zero Taxes on Gains)The wealthy favor private equity and credit (and private placement life insurance) for higher returns with no taxes. If you're worth $1 million, you can, too.
