After the markets close on Wednesday, AMD (AMD, -11.12%) is slated to report its revenues. The company’s stock reached its highest for the current year in September after it launched Radeon Pro V340 server card in late August and since then a large number of price upgrades from analysts have fallen into a correction.
In a recent survey of chip distributors conducted by Stanley Morgan cautioned the investors that the chip industry was “by no means out of the woods” as 44% of the survey applicants stated that the tariff ambiguity has impacted consumers’ orders and supply behavior and 60% said that it has also affected the order trends.
Excises hostile to China in the current war might potentially end up damaging U.S. tech companies and a few companies have already taken preventive measures and issued warnings.
Throughout the quarter, AMD maintained its one of the chief theme that is bleeding market shares off an suffering Intel Corp. INTC, +1.98%
Ross Seymore, an analyst in Deutsche Bank asked in a note, “The question that stands before us is: does the company trade on near-term Sept-Dec-18 potentials, or do investors continue to look out longer term to 2020-2021 (steered chiefly by INTC in PCs-servers vs. AMD’s potential market share gains) as the gauge for valuing AMD?”
Seymore who has a $23 price target and a hold rating, considers that the “integrity” at AMD is presented in the form of its share price and the optimistic sentiments on the stock ignore latent cutthroat responses from Nvidia Corp. and Intel, which is one of the biggest rivals of AMD.
What to expect from AMD earning reports:
In a survey conducted by FactSet, out of the 28 analysts, on average AMD is estimated to reveal accustomed earnings of 12 cents per share, a cent less than what was anticipated at the opening of the quarter. However, in the year-ago period, AMD reported earnings of 10 cents per share. Another software platform that uses crowdsourcing from buy-side analysts, hedge-fund brokerages, and others, Estimize, has called for earnings of 15 cents per share.
According to another 27 analysts interviewed by FactSet, Wall Street anticipates revenue of $1.7 billion form AMD which is less than the &1.76 billion forecasted at the beginning of the quarter. Having reported revenue of $1.64 billion in the year-ago period, AMD forecasted revenue of $1.65 billion to $1.75 billion in the third quarter. On the other hand, Estimize anticipates revenue of net worth $1.75 billion.
Matthew Ramsay, Cowen analyst says that Intel faces some serious issues like manufacturing issues and wealth of competitive. The company is also in the dire need of a new permanent CEO. These factors merely add-up to the AMD’s benefits. He further added:
The industrial conversations reveal the 4 major factors of OEM hindrances that lead to increased approachability to alternative SKUs from AMD:
1) Intel’s averseness to spend capex to materially increase supply and capacity shortages faced during the progressive rare year of PC market strength.
2) Persistent pricing and SKU inflexibility despite capacity issues.
3) Diminished marketing support from Intel to its partners
4) The blunt reminder to the PC network of the position of these customers in Intel’s investment priority list.
Kevin Cassidy, Stifel analyst stated that they expect AMD to continue gaining market share through 2019 since the chips will be fully qualified and the company will also reap benefits from the upgrade of its second-gen chips—7nm Rome. The company will further launch a GPU that will exclusively aim the datacenter market—a 7nm GPU in 4Q18–that will be followed by a PC model in the year of 2019.