Advanced Micro Devices Is Ready For a Rebound

Tech stocks haven’t had a good start to the year with most stocks dropping from their all-time highs. Advanced Micro Devices (NASDAQ:AMD) stock is usually a solid growth name, but it’s down 20% in 2022.

AMD stock: Image of the Advanced Micro Devices (AMD) logo outside of a corporate building
Source: Sundry Photography / Shutterstock.com

As the market worries about inflation, and interest rates, the volatility will continue to impact most tech stocks. AMD stock is down 33% in the past six months and went from $153 last month to $102 today. The stock hit the 52-week high of $164 in November, but trades now near $115.

The recent approval of the Xilinx (NASDAQ:XLNX) deal will help the company significantly and improve its position in the industry. AMD is a solid company that is consistently growing and has reported stellar revenue in the past.

I believe the current dip in AMD stock is nothing but a chance to add it to your portfolio. As the company gears up to report the fourth-quarter results, there is a chance for the stock to rebound.

Xilinx Deal Will Be a Game Changer

AMD announced its intention to buy Xilinx in October 2020 and it has been a much-anticipated deal. Xilinx is a large manufacturer of field-programmable gate arrays (FPGAs). The deal was expected to be closed by the end of 2021 but it went into several hurdles and was further delayed.

Chinese regulators finally gave their approval last week. When the deal closes, AMD will only be stronger in its competition against Intel (NASDAQ:INTC).

Xilinx is a dominant maker of FPGA, which can be reprogrammed after they are made. Most often, FPGA is used in radar systems, 5G telecommunications infrastructure and military communications. The merged entity will sell to Chinese customers on reasonable, fair terms and these conditions will apply for a minimum period of six years.

FPGAs allow a high level of customization for a large range of devices. This will allow the company to meet the demands of the clients efficiently. The deal will have a huge impact on the bottom line and will strengthen AMD’s position in the industry.

Revenue Could Be Higher Than Expected

With the earnings season right here, it is time to brace yourself for a stock rebound whenever the company beats analyst estimates. Advanced Micro Devices has projected a revenue of $4.5 billion for the quarter, which is a 39% rise from a year ago. If it manages to beat this number, it is nothing but impressive.

The company projected a gross margin of 49.5% for the quarter. Interestingly, the company has successfully managed to beat analyst projections in the last three quarters and has raised guidance. A company will only raise guidance when it is confident of meeting the same and it has impressed investors with solid revenue and growth numbers in the past.

It is not surprising to see AMD beat expectations again and I am certain it will be able to deliver solid numbers in 2022. The demand for graphic cards and server processors is only going to grow in the coming years and this is where AMD will be able to benefit.

The Bottom Line on AMD Stock

AMD stock is down from the all-time highs and this does not say anything about the fundamentals of the company. If you look at the bigger picture, Advanced Micro Devices stands strong amidst the competition. It has become a huge name in the industry in the past few years and shows massive growth potential.

The chipmaker will be able to expand its market share in the coming year with GPUs and data center and will impress investors with strong revenue numbers. If you are looking for a solid tech stock to own this year, AMD is the one.

Buy and hold AMD stock for the long term.

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions 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.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.


Article printed from InvestorPlace Media, https://investorplace.com/2022/02/amd-stock-advanced-micro-devices-is-ready-for-a-rebound/.

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