AMD Analyst Surprised By Weakness In Q3 Earnings: What To Watch

(CTN News) – AMD will announce its earnings after the closing bell on Tuesday for the third quarter of 2022.

Following the semiconductor company’s second-quarter earnings beat on Aug. 2, the stock closed slightly lower the following day. AMD closed at $103.86 on Aug. 4 after gaining 6.84%.

In the second quarter, reported non-GAAP earnings per share of $1.05, higher than the consensus estimate of $1.03. Revenues were $6.55 billion, slightly higher than the consensus estimate of $6.53 billion.

Based on analyst estimates, AMD is expected to report 74 cents per share on revenues of $5.82 billion in the third quarter.

Morgan Stanley analyst Joseph Moore maintained an Overweight rating on Monday and lowered the price target to $77 from $86.

AMD Takeaways: Moore attributed the price cut to “some softness in cloud spending and mild deceleration as shortages ease” but said Morgan Stanley is still bullish on  over the long-term.

Due to tight server CPU supply until very recently, might have been less affected by cloud inventory corrections, but high single-digit growth seems unlikely,” the analyst said.

The slowdown in growth will continue during the fourth quarter and into the first quarter of 2023, he said, adding that “growth will then resume.”

AMD is expected to report EPS of 70 cents on revenues of $5.59 billion on Tuesday.

The stock price has been unexpectedly weak, Moore said, and he expects it to remain so in the near-term because of “the magnitude of the business slowdown.”

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On Oct. 13, AMD reversed into an uptrend and has since made higher highs and higher lows. In the same day, the most recent high was $62.72, and the most recent higher low was printed at $58.51.

• AMD has been unable to break above or below that range since then, resulting in a quadruple inside bar on the daily chart. In this case, the pattern is neutral, and it will likely break once reports earnings.

• If earnings report was positive, the stock would regain its 21-day exponential moving average, giving bullish traders more confidence.

• AMD is likely to form a new 52-week low if the stock suffers a bearish reaction, and because the stock hasn’t traded under that level since July 23, 2020, there isn’t much support.

• The resistance levels for AMD are at $61.77 and $66 and the support levels are at $58.92 and $55.84.

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