Earnings Preview: AMD Isn’t the Next ASML
$Advanced Micro Devices(AMD)$ is set to release its Q3 earnings report on October 29, a highly anticipated announcement. Last week, $ASML Holding NV(ASML)$ ’s earnings fell short of expectations, sending its stock down over 10% and dragging down the broader semiconductor sector.
With AMD's upcoming report, investors may get answers to pressing questions raised by ASML's earnings disappointment.
Different Roles in the Semiconductor Space
While both AMD and ASML are major players in semiconductors, their roles differ. AMD is one of the few companies that can genuinely capture market share from $NVIDIA Corp(NVDA)$ whereas ASML’s struggles likely don’t reflect the broader chip demand.
A quick look at ASML’s earnings shows three key factors behind its sell-off:
Lower-than-expected revenue
Weak guidance
Export control challenges
What’s Expected from AMD?
Next up in the semiconductor earnings line is AMD. Will it face a similar post-earnings sell-off? Here’s what’s anticipated:
EPS: $0.91, up 30% year-over-year
Revenue: $6.71 billion, a 15.72% YoY growth
Non-GAAP Gross Margin: ~53.5% (compared to 53% last quarter)
AMD’s earnings are still expected to show healthy growth. Over the past four quarters, AMD has consistently outperformed expectations, and investors are hoping for the same this time around. Additionally, strong Q4 earnings are anticipated, making AMD’s forward guidance a key factor to watch.
One interesting trend: EPS estimates have been cut more often than raised over the past three months, while revenue forecasts have generally risen. $Taiwan Semiconductor Manufacturing(TSM)$ ’s solid monthly results may have influenced analysts, but some still believe margins could come under pressure.
Long-Term Potential and Valuation
Analysts see plenty of room for upside surprises in AMD’s earnings. Unlike ASML, which depends heavily on international clients, AMD enjoys a more balanced global revenue mix. AMD’s strong earnings growth and reasonable valuation make it appealing, especially when looking at its PEG ratio, where AMD stands out as the best value among its peers.
Technical analysis suggests this may be a good buying opportunity. After bouncing above $220, AMD shares have dropped, nearly hitting a 61.8% retracement level in August. Since then, the stock has found support at the 200-day EMA. Key levels to hold are $147 and $130; below that, $120 could be retested, though analysts find that level increasingly unlikely.
ASML’s earnings haven’t altered analysts’ positive outlook on AMD. With a fair valuation and promising growth outlook, AMD remains a good choice for long-term investors.
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