Late last week, Advanced Micro Devices (NASDAQ:AMD) joined the growing number of companies that are halting business in Russia. AMD is stopping all chip shipments to Russia. The market response to the move has been negative. AMD — along with other semiconductor companies that have joined in the Russian sales ban — have seen their stocks dip. In fact, since the company announced its Russia ban, AMD stock has slipped nearly 13%.
Is the Russian market a big enough deal for AMD that walking away from it is going to have a material impact on the company? If so, is AMD to be avoided?
After all, this is just the latest hit in a year that has already seen shares lose nearly a third of their value. Some investors might see this development as the latest reason to stay away from AMD stock. I think that’s the wrong way of looking at this situation.
The latest drop for AMD shares is another chance to pick up this stock at a great price.
AMD Halts Chip Sales to Russia
On March 3, Advanced Micro Devices announced that it was halting all chip sales to Russia in response to that country’s invasion of Ukraine. The ban also extends to Belarus, which is allowing Russia to use its territory as a staging ground for troops. In an email to PCWorld confirming the move, an AMD spokesperson said: “Based on sanctions placed on Russia by the United States and other nations, at this time AMD is suspending its sales and distribution of our products into Russia and Belarus.”
The market reaction to AMD’s move was to send shares down. However, the reality is that Russia is a very small part of AMD’s business, so the monetary impact to the company is minimal. How minimal?
A few weeks prior to the move, the Semiconductor Industry Association (SIA) released a statement about Russian sanctions. In the statement, the SIA said that Russia is not considered a significant purchaser of semiconductors. According to SIA data, Russia accounted for under 0.1% of global chip purchases in 2021. A fraction of a percent.
Russia Is Just the Latest Challenge in 2022 for AMD Stock
There’s no denying the fact that 2022 has been a tough year for many stocks. Fears over inflation, rising interest rates and continued supply chain issues have been weighing on the market. The tech sector has been especially hard hit by these issues. AMD stock had been feeling the effect until record fourth quarter earnings set off a short-lived rally. The reaction to AMD’s Russia sales ban has only added to the losses for the year. Although, at time of writing, AMD stock still remained just slightly above its 2022 low close ($102.60 on Jan. 27).
That leaves the question over whether AMD stock is a smart buy right now. Three weeks ago, I wrote that this stock “screams opportunity.”
This a stock that’s coming off a run of three extraordinary years, including ending 2019 as the top-performing stock on the S&P 500. AMD PC processors are sitting at 15-year highs for market share and the company is making big gains in the lucrative server market. Its custom processors power the hottest next-gen game consoles.
AMD reported record fourth quarter revenue and delivered revenue guidance for 2022 that surpassed analyst expectations. AMD stock earns a “B” in Portfolio Grader, and a consensus “overweight” rating from Wall Street Journal investment analysts.
I wouldn’t worry about the impact of AMD halting sales to Russia.
Bottom Line on AMD Stock
If you want to pick up AMD stock to add to your portfolio, there’s no saying for certain when the current slide will bottom out. So yes, there’s an element of risk involved. However, a purchase now nets you a proven long-term growth performer discounted to October 2021 prices.
On the date of publication, Louis Navellier had a long position in AMD. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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