Bank of America analysts have repeated backing for Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) (AMD) as underwhelming guidance offers scope for a “much-needed reset”.
AMD on Tuesday laid out expectations for revenue to sit between $7.2 billion and $7.8 billion in the fourth quarter, against market expectations for just over $7.5 billion.
Though this prompted shares in the semiconductor firm to plummet, Bank of America analysts noted lower forecasts would bode well heading into its next financial year.
“We believe AMD is well-positioned in the most attractive parts of the semi-market - computing, artificial intelligence (AI) and embedded,” the bank said in a note.
“As much as we still believe NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) will be hard to shake from its 80-85% AI share, AMD still has done an enviable job from virtually zero to [around a] 5% market share.”
This placed AMD in a position to participate in the AI market’s rapid growth, build within the PC and server segment and benefit from a cyclical recovery of the embedded, or field programmable, sector, analysts pointed out.
UBS analysts added the story was “broadly” on track, noting estimates for per-share earnings to exceed $10 by 2027 were “too juicy to get off the train”.
Both Bank of America and UBS reiterated ‘buy’ ratings for AMD as a result, with share price targets of $180 and $205 respectively.
Shares were trading almost 10% lower on Wednesday at $149.69.