AMD was removed from Goldman’s conviction list.
Courtesy AMD
Advanced Micro Devices was removed from Goldman’s Conviction List while other semiconductor companies like Microchip Technology, Teradyne, and Qorvo were downgraded to Neutral as the firm sees macro headwinds for the sector.
Analyst Toshiya Hari hasn’t become exactly bearish on the sector, but he believes it is prudent to assume at least a normalization in demand or a convergence toward long-term trends in 2023 and 2024. Hari cited concerns around inflation and rising interest rates that could adversely affect consumer spending and industrial production.
The analyst has a Buy rating on AMD’s (ticker: AMD) stock but expects “street estimates to stabilize over the coming quarters, as opposed to increasing consistently over the last five quarters,”, listing growing competition in the client CPU space, GPU demand normalizing lower, and PC demand and supply balancing among his reasons.
The Goldman analyst estimates adjusted earnings per share of $4.17 for AMD in the calendar year 2022, which was 3% above Street expectations of $4.01 per share. “This compares with our CY2021/2022 EPS estimates being 35%/65% above Street consensus at the time of our upgrade,” Hari reasoned.
For Microchip Technology (MCHP), which was cut to Neutral from Buy, the analyst sees relative upside from here and believes customer bookings could moderate. Hari revised calendar-year 2022 and 2023 estimated revenue by less than 1% and 8% “as we reflect our expectation for a normalization in demand in 2023,” he noted.
For Teradyne (TER) which was downgraded to Neutral from Buy, the analyst is concerned that growth in 2023 will be muted, while he expects macro headwinds to pressure Qorvo’s (QRVO) revenue and earnings. Qorvo was also cut to Neutral from Buy.
AMD stock declined 1.3% on Monday, Microchip and Teradyne each fell by 1.5%, and Qorvo dropped 2.5%.
Write to Karishma Vanjani at [email protected]
