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Understanding the AMD Stock Plunge and Analyst Twist Understanding the AMD Stock Plunge and Analyst Twist

Advanced Micro Devices, Inc. AMD experienced a significant plunge in premarket trading on Wednesday, leaving investors reeling in reaction to the chipmaker’s fourth-quarter results.

Analyzing the Quarter:

During the fourth quarter, AMD’s earnings and revenue aligned with expectations, while its first-quarter revenue guidance failed to meet the estimates of some analysts. Traders who had driven up the stock ahead of the earnings release seemed poised to offload their holdings in response.

Analyst’s Perspective:

Despite the negative market response, an analyst at KeyBanc Capital Markets maintained an Overweight rating on AMD shares and increased the price target from $195 to $270. This upward revision was underpinned by the firm’s forward valuation to 2025.

The firm’s semiconductor analyst, John Vinh, noted that the PC recovery fell slightly below expectations, although it is anticipated to show improvement in 2024.

Looking at AI and Data Centers:

Highlighting the company’s outlook for the MI300X AI accelerator, Vinh stated the figure was revised up to $3.5 billion, with a continuous ramp-up over the year, skewed towards the second half. Additionally, Vinh mentioned that Data Center revenue saw a sequential and year-over-year rise, ascribed to server CPU market share gains, robust fourth-generation EPYC processor sales, and a faster-than-expected MI300X ramp-up.

AMD expects Data Center GPU revenue to show a sequential increase following a strong performance in the fourth quarter, as noted by the analyst.

Vinh remarked, “While disappointed with non-GPU results, we’re encouraged with the strong GPU revenues and commentary.”

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In premarket trading, the stock experienced a 6.63% decline to $160.65, as reported by Benzinga Pro data.