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A drop in Advanced Micro Devices stock that has followed the release of its latest earnings report is a great buying opportunity, according to Cowen.

AMD (ticker: AMD) makes processors that act as the main computing brains for personal computers, servers, and graphics cards. It competes with Intel (INTC) and Nvidia (NVDA).

The back story. AMD stock had risen more than 80% this year through the close of trading on Tuesday. Investors have grown increasingly optimistic about the company’s product pipeline this year.

Late Tuesday, AMD reported adjusted second-quarter earnings per share of 8 cents, matching the 8 cents Wall Street had expected. It posted revenue of $1.53 billion, also in line with expectations.

Guidance for the current quarter and full year was lower than Wall Street anticipated. The midpoint of the range of potential revenue figures the company predicted for the September quarter was $1.8 billion, versus the average of $1.94 billion among analysts. The company also lowered its guidance for 2019 growth in sales to a percentage in the mid single digits, from the high single digits.

The company said its semi-custom business, which makes chips for gaming consoles, will perform much worse for the year than previously expected.

What’s new. Cowen analyst Matthew Ramsay on Wednesday reiterated his Outperform rating for AMD stock, saying the guidance reduction didn’t change his positive view.

“No change to our thesis, as we believe consoles and China are entirely responsible for 2H downside,” he wrote. “We believe...CPU/GPU share gains remain on track with Rome, Ryzen and Navi in the midst of their ramps.”

AMD stock was down 8% to $31.14 on Wednesday.

In similar fashion, Rosenblatt Securities analyst Hans Mosesmann played down the issues with the console gaming business. He reiterated his Buy rating for the chip maker.

“Back up the truck,” he wrote. “AMD’s lower guide...is largely game console specific...at the end of the 7-year [console] cycle should investors care? We think not.”

Looking ahead. Ramsay reaffirmed his $40 price target for AMD, while Mosesmann reiterated his $42 forecast.

Write to Tae Kim at tae.kim@barrons.com