Last week, Intel’s cautious outlook and warning of softness in the PC market sent its shares and those of other CPU-makers sharply lower.
- AMD’s Q3 sales are expected to rise over 41% to $13.09 billion, per Koyfin.
- Morgan Stanley raised its price target on AMD to $510 from $465, while keeping an ‘Equal weight’ rating.
- Retail sentiment for AMD was ‘bullish’ on Tuesday.
Advanced Micro Devices (AMD) will release its third-quarter results after the market closes Tuesday, with the report carrying added significance after troubling earnings from rival Intel Corp. (INTC).
Last week, Intel surprised investors by missing quarterly revenue expectations and issuing a weaker-than-expected sales forecast. The company also gave a bleak outlook for the PC industry, a major buyer of its central processing units (CPUs).
A one-off disruption and temporary shutdown at Intel’s factory in Kiryat Gat, Israel, weighed on the company’s forecast, it said. Still, investors viewed the weak forecast as a signal for an early pullback in chip demand.
Intel’s stock fell nearly 29% last Friday, the day after its report, and another 7.5% on Monday, also pushing AMD shares lower. AMD dropped 11% and 7.5% on those days, respectively.
On Monday, Morgan Stanley raised its price target on AMD to $510 from $465, while keeping an ‘Equal weight’ rating. Forty-four of 54 analysts have a ‘Buy’ or higher rating on the stock heading into AMD’s report, with their average price target of $646.74 implying a 39% upside, according to Koyfin.
AMD Q3 Expectations
Investors would turn to AMD to help determine whether Intel’s weakness was company-specific or reflects a broader problem in the chip market.
AMD guided for revenue of about $13 billion, plus or minus $300 million, and analysts expect $13.09 billion, which would be 41.5% higher than a year ago. AMD earns most of its revenue from data center chips, but weaker demand for PCs, as flagged by Intel, could still weigh on its profits.
Intel’s Warning
Intel issued a fourth-quarter sales outlook of $15 billion to $16 billion, falling significantly short of analysts’ expectation of $17 billion. It forecasts adjusted earnings of $0.25 per share, also below the expected $0.43.
Additionally, Intel expects its gross margin to narrow to 38%, down from 43% in the third quarter. Sales in Q3 came in line with expectations.
More importantly, Intel said the PC market slump will persist through at least the first half of 2027, with shipments declining 10% next year after a 12% slide in 2026.
“The pace of this PC correction has accelerated over the last 2 months, as our OEM partners are aggressively managing inventory to match the softer sell-through,” Intel CEO Lip-Bu Tan said in the company’s analyst call. “We expect the current environment to persist until memory availability and prices begin to normalize.”
Retail View On AMD
On Stocktwits, the retail sentiment for AMD inched higher in the new week and was ‘bullish’ as of early Tuesday.
“$AMD there is no real justification for this to be down 25% over the past month. They’re going to crush earnings and likely $1000 over the next 6 months,” said a trader.
Another echoed the view, saying, “I’m holding all of my shares… There is not one analyst that says sell… In my opinion, it’s hold and buy the dip.Think 2027, it’s right around the corner.”
Year to date, AMD stock is up 118%.
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