AMD slips as Wells Fargo cuts estimates for the next three years
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Advanced Micro Devices (NASDAQ:AMD) slipped on Wednesday as Wells Fargo analyst Aaron Rakers cut his estimates on the chipmaker for the next three years, due to continued deterioration in the PC space and "increased concern over data center demand."
Rakers, who has an overweight rating on AMD (AMD), said he is "surprised" by the lack of investor interest with the semiconductor company trading at its current levels, given it is well positioned to keep gaining market share and its strong product roadmap execution. However, Rakers said a lack of confidence in the industry as a whole has played a larger role in affecting investor enthusiasm. 
AMD (AMD) gave up 1.6%, to fall to around $67 a share in pre-market trading, Wednesday--or 53% less than at the start of the year. Rakers said the company's shares "are likely to remain under pressure" until investors feel that risks against the stock have alleviated. For his part, Rakers has a $130-a-share price target on AMD's (AMD) stock.
Rakers added that the PC market is expected to decline in the mid-to-high teens this year and mid-single digits next year. And with incremental concern on the data center, there are "downside risks in AMDâs Data Center segment." 
As such, Rakers lowered his revenue and earnings estimates for 2022 to $25.5B and $4.11 a share, down from $26.2B and $4.32 a share. He also cut his 2023 and 2024 estimates, moving to $26.6B and $29.4B in annual revenue, with earnings per share of $4.13 and $4.75, respectively.
With regards to the data center, Rakers said AMD (AMD) is continuing to gain share, but there is a concern around inventory, particularly among the hyperscalers. 
"AMDâs commentary on data center growth [and] resiliency is a key focus amid concerns around slowing hyperscale [capital expense] dynamics" and elongated deal cycles, Rakers said.
In looking at IDC data, Rakers estimated that AMD's (AMD) had 22% of the server CPU market in the first half of 2022, up from 13% less than a year ago and 19% in the second half of 2021. 
On Monday, Bank of America reiterated its buy ratings on Advanced Micro Devices (AMD) and several other cloud computing-related semiconductor companies, noting the group is still likely to benefit from increased spending.