Zacks Investment Research


The Zacks Computer and Technology Sector has struggled to find its footing in 2022 amid a hawkish pivot from the Fed, down more than 30% and widely lagging behind the S&P 500.

A titan in the realm that quickly became an investor favorite, Advanced Micro Devices AMD, is on deck to unveil quarterly earnings on November 1st, after the market close.

Advanced Micro Devices offers a broad portfolio of high-performance and adaptive processor technologies, combining CPUs, GPUs, FPGAs, Adaptive SoCs, and deep software expertise to enable leadership computing platforms for cloud, edge, and end devices.

Currently, the chip giant carries a Zacks Rank #5 (Strong Sell) with an overall VGM Score of a C.

How does everything stack up for the company heading into the print? Let’s take a closer look.

Share Performance & Valuation

It’s no secret that it’s been rough sailing for AMD shares in 2022, down nearly 60% and coming nowhere near the general market’s performance.

Image Source: Zacks Investment Research

Over the last three months, the adverse price action of AMD shares has continued, falling roughly 38% and again underperforming the S&P 500.

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Image Source: Zacks Investment Research

AMD’s valuation multiples have pulled back by a fair margin; the company’s 19.9X forward earnings multiple is nowhere near 2021 highs of 67.8X, representing a 9% discount relative to its Zacks Computer and Technology sector.

Quarterly Estimates

Analysts have been bearish for the quarter to be reported over the last several months, with 14 negative earnings estimate revisions hitting the tape. The Zacks Consensus EPS Estimate of $0.67 indicates a Y/Y earnings decline of roughly 8.2%.

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Image Source: Zacks Investment Research

AMD’s top-line is in better standing; the Zacks Consensus Sales Estimate of $5.6 billion suggests a year-over-year increase of nearly 30%.

Quarterly Performance & Market Reactions

AMD is currently on a mighty-strong earnings streak, exceeding both revenue and earnings estimates in nine consecutive quarters.

In its latest release, the chip giant registered a 2% EPS beat paired with a slight 0.4% revenue beat. Below is a chart illustrating the company’s revenue on a quarterly basis.

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Image Source: Zacks Investment Research

In addition, the market has primarily cheered on the company’s results, with shares moving upward following its last three quarterly releases.

Putting Everything Together

AMD shares have sailed through rough waters in 2022, with sellers remaining in control for most of the year.

The company’s valuation multiples have pulled back by a fair margin, but its Value Style Score of an F could steer away value-focused investors.

Analysts have been bearish in their earnings outlook, with estimates calling for solid revenue growth but a decline in earnings.

AMD has consistently exceeded quarterly estimates, and the market has reacted well as of late following the company’s recent prints.

Heading into the release, Advanced Micro Devices AMD carries a Zacks Rank #5 (Strong Sell) with an overall VGM Score of a C.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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