The semiconductor sector is currently experiencing a correction, with the PHLX Semiconductor Index down approximately 12% from its early March highs. However, investors are eagerly anticipating Advanced Micro Devices Inc.’s (AMD) upcoming earnings report, scheduled for April 30, to potentially shift sentiment within the industry.
Recently, AMD shares have faced downward pressure, declining by 26% from their peak in March. Concerns have arisen, in part, due to Nvidia Corp.’s pricing strategy for its new Blackwell chip lineup, which could potentially undercut expectations and stimulate greater adoption.
Analysts, like Jordan Klein from Mizuho, suggest that AMD’s earnings results hold significant sway over sector sentiment, potentially more so than any other semiconductor company. However, Klein acknowledges that there’s apprehension among investors, with AMD’s stock chart showing signs of a significant decline. Many investors are hesitant to buy amid fears of catching a falling stock.
The focus for AMD’s earnings lies heavily on its MI300 artificial-intelligence product. Analysts are keen to see whether AMD provides positive commentary on the MI300 or raises its revenue outlook, which was initially set at a minimum of $3.5 billion for the year. Klein emphasizes the importance of AMD’s outlook for the MI300 beyond the second quarter in supporting the stock and attracting potential buyers.
However, sentiments among investors regarding AMD appear to be swayed by short-term trends rather than long-term fundamentals. Matthew Ramsay, an analyst at TD Cowen, notes the herd mentality prevailing in the market, with sentiment fluctuating more than the underlying fundamentals of AMD. Ramsay suggests that near-term concerns regarding the MI300’s expectations may be exaggerated, as the product continues to serve as a strong alternative to Nvidia’s offerings.
Overall, the semiconductor sector is poised to react significantly to AMD’s earnings report and commentary. Analysts anticipate that the outcome has the potential to either bolster the sector or drive it lower, depending on AMD’s performance and guidance. Despite short-term fluctuations, analysts like Klein remain optimistic about AMD’s prospects, underscoring its significance within the semiconductor industry.
