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As Advanced Micro Devices Inc. shares retreats to Earth, investors have the opportunity to decide whether the current climate of trade war has affected the chip maker's ability to capitalize on the woes of its main rival.
AMD
AMD -11,12%
should release its results after the market closes on Wednesday.
AMD's shares nearly peaked in September after AMD launched the Radeon Pro V340 server card in late August and many price hikes by analysts.
In a recent Morgan Stanley survey of chip distributors, the firm warned investors that the chip industry was "irrelevant," with 60 percent of respondents to the survey saying recent uncertainty tariffs had affected order trends and 44% reported it. had an impact on customer orders and inventory behavior.
Tariffs against China in the current trade war could end up hurting US technology companies, and some companies have already issued warnings and taken precautionary measures.
During the quarter, however, one of AMD's dominant themes was the company's market share, which blew an Intel Corp. in trouble.
INTC, -2.16%
Lily: AMD vs. Intel: The power balance of chip makers seems to evolve
"For us, the key question is this: is the company trading in short-term expectations from September 18 to September 18, or are investors continuing to seek a longer term until 2020?" 2021 (mainly due to AMD's market share gains compared to INTC in PC / servers) as a barometer of the AMD value? Commented Ross Seymore, an analyst at Deutsche Bank.
Seymore, which has a holding rating and a price target of $ 23, believes that AMD's "quality" is already factored into its stock price and that bullish sentiment on equities ignores potential competitive responses from investors. Intel and Nvidia Corp.
NVDA, -4.33%
What to expect
Earnings: Of the 28 analysts surveyed by FactSet, AMD is expected to post an average adjusted profit of 12 cents per share, down from 13 cents per share expected at the beginning of the quarter. AMD announced earnings per share of 10 cents the previous year. Estimize, a crowdsourcing software platform for hedge fund executives, brokerages, buy-side analysts and others, claims a profit of 15 cents per share.
Returned: Wall Street expects a turnover of 1.7 billion US dollars, according to 27 analysts surveyed by FactSet. This is down from the $ 1.76 billion expected at the beginning of the quarter. AMD, which had sales of US $ 1.64 billion for the same period last year, forecast revenue of US $ 1.65 billion to US $ 1.75 billion for the third quarter. Estimize is forecasting revenue of $ 1.75 billion.
Do not miss: why AMD thinks it can challenge Intel in servers
Analysts expect for the quarter on a business turnover of 1.05 billion USD in computer and graphics sales, a 29% gain over the same period of the previous year, and a drop of 21% of sales of integrated and semi-custom companies to 653 million USD.
Movement of stock: AMD's shares have experienced a period of high volatility following the release of its best results in seven years in its previous report, peaking at $ 34.14 in mid-September, peaking at 12 years, 200 months. % overvoltage, then fall by more than 30% at current levels.
Read more: AMD stock records its best quarter in 27 years
AMD shares remain the best-performing stocks on the S & P 500 since the beginning of the year, with a gain of 130%, and have been the second most traded stocks on the index over the last 52 weeks. In comparison, the S & P 500
SPX, -0.04%
up 3.5% for the year, the Nasdaq Composite Index, very technology-driven
COMP -0.48%
up 7.9% and the PHLX Semiconductor Index
SOX, -1.55%
is down 2.2%.
What analysts say
Of the 33 analysts who cover AMD, 13 have buy or overweight ratings, 15 have holding ratings and five have sales or underweight ratings, with an average price target of $ 25.25. .
Cowen analyst Matthew Ramsay, who has an outperformance rating and a $ 33 price target on AMD, said AMD should "partially fill the void" left by the Intel CPU or processors , during the fourth and first trimester, and use products at 7 nm. conquer long-term market shares in the second half of 2019 and in 2020.
"7nm" and "10nm" – where "nm" means nanometers – refers to the small size of a chip maker capable of fabricating transistors on a computer chip, the general rule being that transistors smaller ones are faster and more efficient in terms of diet.
Ramsay said:
|
Industry conversations reveal four main factors of frustration among OEMs, which have resulted in greater receptivity to AMD's proposed alternatives: 1) capacity shortages in an increasingly rare year on the personal computer market and Intel's reluctance to spend investments to significantly increase supply; 2) price maintenance and rigidity of references, despite capacity issues; 3) decreased Intel's marketing support to its partners with the unwinding of much of Intel Inside's co-marketing program; and 4) the sudden reminder to the PC ecosystem of the position of these customers on Intel's list of investment priorities (ie behind the seven cloud giants and behind Apple). |
Ramsay thinks that AMD is "deeply engaged" with five of the seven data center players. These include Tencent
7:00 + 0.36%
who has already made an announcement, Amazon
AMZN, -0.38%
and Google
GOOG, + 0.78%
GOOGL, + 0.66%
who Ramsay says that he's waiting for announcements soon, and Microsoft
MSFT, + 0.15%
and Baidu
BIDU, + 0.02%
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Stifel analyst Kevin Cassidy, who has a quote on AMD and a price target of $ 38, said he hoped the conference call would be used for the conference call to report on the treatment products. 7-nm graphics, GPU and CPU products, an expansion of gross margins. opportunity to increase market share in the personal computer market.
"We expect that AMD will continue to gain market share until 2019, as chips will be fully qualified, while the company will also benefit from the second generation chip array, the" 7nm "Rome" Cassidy said. "AMD plans to launch its 7 nm graphics processor at 4T18, which will specifically target the data center market. We expect that it will be followed by a PC model by 2019. "
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