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This earnings move by management would cause implosion in AMD stock, analysts warn

Published 04/30/2024, 09:50 PM
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AMD
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As anticipation builds ahead of AMD's (NASDAQ:AMD) earnings report, investors are bracing for potential market volatility following a warning from Mizuho analysts. With the semiconductor giant set to unveil its financial performance after the closing bell on April 30th, all eyes are on AMD’s stock as Mizuho cautions against a management decision that has provided some nervousness ahead of the release.

AMD earnings preview

In a note to clients Monday, Susquehanna lowered its price target for AMD to $185 from $200 per share, maintaining a Positive rating on the company.

Analysts at the firm said they “expect generally in-line to slightly weaker guidance” from AMD, “driven by weakness in AMD’s core business, perhaps offset by potential MI300 upside.”

“We note cooling investor sentiment for MI300 after competitive GTC announcements from NVIDIA (NASDAQ:NVDA). However, we believe further upward revisions to MI300 guidance are likely, and necessary, for shares to move higher,” added the firm.

At Morgan Stanley, the AMD price target was cut to $177 from $193, with the bank maintaining an Overweight rating on the stock. Morgan Stanley lowered its price target for AMD, amid longer-term concerns.

“AMD is one of the biggest ‘battleground’ stocks this earnings period, amid mixed conditions in the core business and longer-term questions in AI around NVIDIA's coming Blackwell chip,” said the bank. “Our view is constructive longer term, but we don't see this quarter as a catalyst given those factors.”

Elsewhere, Erste Group downgraded shares of AMD to Hold from Buy in a note last week, highlighting the company's valuation as a factor influencing its more neutral view on the stock, while

Mizuho issues a stark warning on AMD stock

Mizuho analysts released a note covering AMD ahead of its earnings release today, issuing a word of warning to investors.

“I know for a fact that after some sell side checks suggesting MSFT was cutting their Mi300 GPU orders as well as chatter about lack of HBM DRAM from Samsung (KS:005930) to run with AMD’s GPU chips, a great deal of investors began shorting AMD and betting against the rev estimates for 2024 (the $4.5-5B for Mi300),” said the analysts.

They add: “It is not like AMD is now a super consensus short, but it is shorted and many investors I speak with will not touch it ahead of the print on fears not raising the current Mi300 rev target of $3.5B for ’24 would lead to a implosion in stock.”

Furthermore, the analysts say that focusing solely on one quarter or update for Mi300 compared to the bigger picture “feels like what is wrong with this market.” However, it is acknowledged that with expectations for GPU growth at AMD high and their valuation elevated, investors need to feel confident in a path towards $10 billion next year in Mi300 revenue.

Overall, the Mizuho analysts think this debate or competition will be decided on tonight’s print and guidance, stating that patience is required and “that it will be handsomely rewarded for AMD investors.”

“But the fast money/trader community seems to have taken charge and created a set-up for AMD whereby they have to at least raise the $3.5B rev [revenue] bogey to $4B if not $4.5B to convince folks they are executing well, not seeing any customer cancellations or push-outs and can track to $8-10B in revs next year,” said the analysts. “And this is why I am extra nervous into the print.”

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