Competition: AMD competes directly with Intel in the microprocessor market. Consequently, any fluctuations in market share between AMD and Intel could result in risk to our estimates. AMD competes directly with NVIDIA in the graphics and AI GPU market. Consequently, any fluctuations in market share between AMD and NVIDIA could result in risk to our estimates.
PC End Market: AMD derives roughly 30% of sales from the PC industry, which is highly dependent on IT spending. Therefore, any major uptick/downtick in IT spending could result in upside/downside to our estimates and rating for AMD.
Customer Risk: AMD’s derives roughly 15% of revenue from Sony and Microsoft. As a result, any major increases/decreases in orders from Sony or Microsoft could have a positive/negative effect on our estimates for AMD.
Valuation: While AMD is currently trading in line with its historical range, revisions to Consensus revenue estimates could result in high volatility to AMD stock.
Tender Offer: Any public or private tender offer for all or part of AMD’s business could drive the stock higher and cause us to re-assess our rating.
If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our target price. However, should they be less than anticipated, the stock could trade above our target price.
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