More Wall Street heavyweights are scheduled to report first-quarter results this week, including one Advanced Micro Devices (NASDAQ:AMD). The semiconductor giant is scheduled to release its latest quarterly report on Tuesday, once the market has calmed down.
The company’s stock was one of last year’s winners, reaping the spoils of rising AI-powered technology. However, things have gotten a little worse recently, with the stock down 25% since its high in early March.
But if you think the next print edition will begin a meaningful change of direction, five-star investor Der Sansizbayev has a word for you.
Sansizbayev is taking a cautious stance ahead of the result, citing several factors. First, Intel’s recent weak guide does not bode well for its peers, given that AMD, like Intel, holds a significant position in his CPU segment.
Additionally, Sansyzbayev highlights the major inventory challenges facing AMD. From 2021 to 2023, inventory levels almost tripled, but revenue for the same period increased by only 38%. “Apart from the obvious obsolescence and impairment risks, increased inventory levels tie up cash that could be reinvested in profitable growth,” Sansizbayev said. If this continues, AMD will have to rely on discounts, which could negatively impact profitability. In my opinion, this is a red flag.”
It’s well known that AMD has significantly closed the gap with Intel in the CPU market over the years, but while Sansyzbayev acknowledged AMD’s “long-term potential,” he said the company will compete with Nvidia in GPUs. segments that are considered difficult to do. But that doesn’t mean it can’t, given that it’s led by the brilliant Lisa Su and has dedicated a lot of resources to research and development. Nevertheless, Sansyzbayev does not expect AMD to be his GPU leader for the “foreseeable future.”
As such, Sansizbayev says AMD stock remains a sell at this point. “Given high inventory prices and Intel’s recent weak guidance for the second quarter, we do not believe a generous 20% premium to fair value is justified,” he concluded. (Click here to see Sansizbayev’s record)
Still, Sansizbayev’s views don’t seem to be well-received by the Wall Street analyst community. AMD stock claims a “Strong Buy” consensus rating, based on a combination of 25 buys and 7 holds. Considering his average target is $204.15, the projection is for him to have a one-year return of around 30%. (look AMD stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
