Advanced Micro Devices' Q3 Warning a Magnet for Bear Notes

No less than 17 brokerages lowered their price targets

Digital Content Manager
Oct 7, 2022 at 10:06 AM
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Advanced Micro Devices, Inc. (NASDAQ:AMD) is slumping this morning, and taking the rest of the semiconductor sector with it. The company lowered its third-quarter sales forecast by roughly $1 billion to $5.6 billion last night, noting that recent macroeconomic conditions weakened the PC market "significantly" this quarter. The end of strict Covid regulations paired with ballooning inflation has lowered demand across the board for chip stocks, while a number of other catalysts weigh heavily on the sector. 

No less than 17 analysts slashed their price targets following the news. The lowest adjustment came from Barclays all the way to $68. Meanwhile, Jefferies predicted that the chip market could be headed for "its deepest downcycle in a decade." The 12-month consensus price target still sits at $108.69, marking an almost 70% premium to last night's close, so the door is still wide open for even more price-target cuts. What's more, of the 26 analysts in coverage, 19 say "buy" or better. 

Short-term options traders have also taken a bullish stance lately. This is per AMD's Schaeffer's put/call open interest ratio (SOIR) of 0.82, which stands in the relatively low 22nd percentile of its 12-month range. In other words, these traders have been more call-biased than usual. 

AMD was last seen down 5.7% at $64.07, a long way from the stock's late-November peak at $164.46. The equity's most recent downturn has been met with resistance at the 20-day moving average since August, and today's drop has the stock trading dangerously close to its Sept. 29, two-year low of $62.83. Year-to-date, AMD has shed 56%. 



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