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In a research note Thursday, a BofA analyst cut estimates on Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) to reflect further deterioration in consumer PC demand and clearing of excess inventory.
The analyst lowered the price target on Intel to $30 from $35, reiterating an Underperform rating, and cut AMD’s price target to $100 from $120, keeping a Buy rating.
However, after previous cuts, while the analyst said one more is “unwelcome,” they see PC-related cuts “nearing the end,” especially for AMD.
Intel’s Underperform rating is based on the continued strategic, financial, and competitive challenges it faces, such as the reliance on its PC business, while AMD’s Buy argument is focused on its current valuation, data center share gain potential, and execution consistency, the analyst said.
“We continue to see $6 in CY24E EPS power for AMD implying compelling 12x PE for a leading compute franchise,” the analyst explained. “We expect data center strength (Genoa ramp) to help offset consumer PC/gaming headwinds. For CY23 we now model 9% YoY growth and $4.47 in pf-EPS which is below consensus at 12% sales growth and $4.86 pf-EPS.”
