AMD Struggles for Catalysts as Bulldozer Disappoints

AMD’s (NYSE:AMD) stock has traded sideways this week following the official launch of its Bulldozer architecture chips for desktops. Unfortunately, the early reviews of this particular chip are not encouraging and consequently, the near term success of the company remains clouded.

Despite this, the stock has held up not due to any catalysts, but instead due to the fact that it has fallen 30% in the last month already. Most analysts have bullish price targets or market perform rating for AMD given its steep decline.

We think that the upcoming Q3 2011 earnings call will be critical in getting more clarity regarding where the company is headed. AMD is in a dangerous spot as competitive threats from Intel (NADSDAQ:INTC) and Nvidia (NASDAQ:NVDA) threaten to marginalize AMD as the company has failed to keep up with consumer shifts. The company has so far been unable to capitalize on the growing mobile market while remaining vulnerable to the weakened consumer PC market.

AMD needs to either gain share with Llano, do better with Bulldozer in servers or throw out a superb mobile chip in the market if it wants to recover past levels and regain investors’ confidence.

Our price estimate for AMD stands at $9.90, which is about double the market price.

Understand How a Company’s Products Impact its Stock Price at Trefis