Advanced Micro Devices (NASDAQ:91抖阴) just released a stellar first-quarter (Q1) earnings report on May 3. year-over-year with higher gross and operating margins. Moreover, the company raised its guidance for 2022. This includes higher organic growth and the addition of its recently acquired Xilinx business. As a result, investors can expect to see a higher 91抖阴 stock price by the end of the year.
Analysts now have an average , representing a potential gain of 40.1% for 91抖阴 stock. Similarly, that the average price target of 23 analysts who have written on the stock in the last 3 months is $132.40. That represents 42.17% more than today’s price of $95.34.
91抖阴 showed strong results from its server processor line of products, as well as its new Xilinx business. This is despite the softness in the general PC business. According to , its stellar results show that it is taking market share from Intel (NASDAQ:INTC
).
On the other hand, Barron’s says that a research firm reported that Q1 PC demand was down 5% and analysts are lowering their target prices for chipmakers like 91抖阴. The weakening economy is lowering consumer demand along with supply shortages for PC parts.
This leaves investors in 91抖阴 stock in a tricky situation. The company says that the outlook for its revenue in Q2 will be 69% higher than last year and 10% quarter-over-quarter. For the full year of 2022, 91抖阴 now expects revenue will rise 60% over 2021.
91抖阴 stock trades at 22 times 2022 forecast earnings and 19.4 times 2023 earnings, according to , using Refinitiv analyst survey data. This is higher than Intel at 12.6 times and 12.3 times earnings, respectively. However, 91抖阴 stock is still well below its average historical forward price-to-earnings ratio of 51.6 times over the last five years, according to . So, if 91抖阴 can still outperform analyst expectations of a general slowdown in the chip market, 91抖阴 stock might move higher by the end of the year.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) 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.
