- Advanced Micro Devices (AMD) may be down but it is a chance to buy more.
- The company is well-placed in the industry and is in the right hands.
- A dip due to analyst rating is not a reason to avoid the stock.
AMD stock is down after the analysts at Barclays downgraded it, citing the increasing pressure from the competitors in the PC and gaming markets.
Blayne Curtis, a Barclays analyst has lowered his rating for the stock to equal-weight from overweight and cut the price target to $115 citing the cyclical risk across the end markets in the coming year.
AMD stock has dipped more than 9% over the past week and went from $120 to $110. It was trading at the highs of $164 last November but due to the tech sell-off, the company has suffered.
I love AMD stock and believe in its long-term growth potential. The stock is the one to own and hold. This dip is a great chance to take your position. With that in mind, let’s dig deeper into why I am still bullish on the stock.
| Advanced Micro Devices | AMD | $110.53 |
AMD recently closed the acquisition of Xilinx and the market opportunity for the company is huge. It addresses edge computing, cloud computing, and intelligent devices and is estimated at $135 billion.
The acquisition will improve AMD’s margins as well as free cash flow in 2022. The company expects its revenue to increase 31% this year and hit $21.5 billion, this is excluding the revenue from Xilinx.
Besides the acquisition, AMD already holds a strong market and the demand for its products is on the rise. Even if the demand for PC falls, AMD has set a standard in the industry and could continue to achieve significant gains throughout the year.
The PC market correction could have a minor impact on the bottom line, but if takes the stock downward, it will be an even better buying opportunity.
A Closer Look at AMD Stock
AMD is one of the top tech companies for a reason. The demand for tech is constantly growing and it will continue to grow in the coming years.
This means that even if there is competition, AMD will be able to do enough business. The company’s growth story is impressive which shows that it is in the right hands.
AMD’s fundamentals are proof that the business is growing at a steady rate and the recent downgrade has nothing to do with the growth rate of the company. Management has projected a revenue of $5 billion in the first quarter of the year and $21.5 billion for the full year.
Considering the way the company is growing and the impact of the Xilinx merger, it is right to conclude that the numbers do look achievable and AMD stock will be able to impress investors yet again with its wide range of products and impressive bottom line.
The Bottom Line
Rosenblatt analyst Hans Mosesmann considers the dip a buying opportunity and contends that AMD will not miss the 30% year-over-year sales growth target for this year. The analyst also expects the company to gain solid data center market share and has a Buy rating for AMD stock.
Analyst opinions or market news can sometimes push the stock into a downward spiral but investors should be able to identify a company that shows potential.
AMD is a solid company with strong fundamentals and an impressive growth story. And the dip in the stock is a good chance to add it to your portfolio.
When it comes to AMD stock, believe the facts and fundamentals and not go by the temporary dips. Load up on the stock in every dip and hold for the long term to generate significant returns.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.