Wells Fargo analysts believe the Q3 consensus estimates for Advanced Micro Devices (NASDAQ:AMD) are “too high,” hence they are “near-term cautious” on the stock heading into the Q2 earnings report.
The analysts see Q3 EPS and revenue at $0.60 and $5.43 billion, respectively, below consensus for EPS of $0.73 and revenue of $5.83B. For this quarter, AMD guided to $5-5.6B in revenues.
“Traditional cloud spend/optimization, broadening AI participation (albeit MI300 a 4Q23+ story), PC sell-thru vs. sell-in normalization (finalized inventory correction), tough Embedded (Xilinx) growth comps + normalized backlog, and maturing game console cycles are key areas of question/focus, in our opinion,” the analysts wrote in a client note.
Still, they reiterated an Overweight rating and a $150 per share price target on AMD stock.
“We maintain our belief that AMD is positioned to reaccelerate server CPU share gains in 2023 with the full breadth of the Zen4-based Genoa and Bergamo EPYC CPU product cycles, along with an expectation of material contributions from the MI300 APU/GPUs into 4Q23,” they added.
On Intel (NASDAQ:INTC), the analysts see a positive turn in sentiment, which could pave the way for better stock performance in the second half of 2023.
“Although we think competitive dynamics (i.e., it's much more than just AMD) are underappreciated, and it's still too early to call Intel's five-node/4-yr roadmap execution a success, we do find ourselves believing in a more positive risk-reward setup in INTC w/shares in the sub/low- $30/sh. range - especially for those investors with a multi-yr investment duration,” they noted.
They rate INTC with an Equal Weight rating and a $32 per share price target.