Among several chip products, the end-market demand for some of Advanced Micro Devices (AMD) - Get Report products may be constrained by the coronavirus. Meanwhile, the stock hasn't pulled back very much.
The stock is down just 2% roughly for 2020 compared to the iShares S&P Semiconductor ETF's loss of 7.8%.
AMD shares trade at about 40 times next year's earnings, which many don't see as wildly overstretched, especially compared to its recent history. And earnings growth for 2020 is expected to be 80%.
But the company sees a solid chunk of both revenue and its manufacturing operations out of China, where the economy is largely shut down due to the virus.
Here's where AMD could be impacted:
"There has clearly been a near-term impact on PC manufacturing and end-market demand in China," said TheStreet's tech columnist Eric Jhonsa. "There probably some impact on the server business. More recently HP declined to give April quarter guidance. At the same time, Chinese production has been coming back on line. The bigger concern now is how the outbreak's spread globally could impact demand in various markets."
"There is some downside risk to the 2020 guidance AMD previously gave. The stock has run up a descent amount. At the same time, the company does have a lot of growth drivers."
Read Jhonsa's full take on AMD on Real Money.
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