Yesterday afternoon, Advanced Micro Devices (NASDAQ:AMD) CEO Lisa Su gave investors some tough talk. They’ll have to brace for disappointing third-quarter 2022 results, it seems. Among other issues, Su cited anemic PC sales. It shouldn’t be too surprising, then, that AMD stock fell sharply this morning.
Financial traders, by and large, already expected chipmakers like AMD to have a challenging Q3 — but perhaps not this challenging. Su’s warning really hit home as she observed, “The PC market weakened significantly in the quarter.”
Su also touched upon the topic of supply-chain disruptions, saying, “macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain.” This will, no doubt, have a negative impact on AMD’s third-quarter revenue.
And indeed, the company expects its Q3 revenue to total around $5.6 billion. AMD’s previous outlook had been higher, at $6.7 billion, plus or minus $200 million.
What’s Happening With AMD Stock?
The market’s reaction to Su’s warning was immediate and severe. AMD stock slumped 8% within the first half-hour of today’s trading session.
There might be a silver lining for prospective, value-focused investors, however. AMD’s trailing 12-month price-to-earnings (P/E) ratio is now down to 26.65. Also, the shares are at a 52-week low.
It’s one of those “hold your nose, close your eyes and buy” types of scenarios. Investors should just accept that AMD’s upcoming quarterly report will probably be worse than previously expected. For example, AMD now expects its Q3 non-GAAP gross margin to be approximately to be around 50%, instead of the previously predicted 54%.
Besides, AMD stock investors may have to deal with further downturns as the market absorbs the company’s warning and revisions. Still, there may be a bargain here for intrepid traders as this challenged chipmaker navigates tough tech-market terrain.
On the date of publication, David Moadel 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.
