Since soaring to multiple all time high closes in the first quarter of the year, shares of Advanced Micro Devices Inc (NASDAQ: AMD) have been on the back foot. What had been a 300% rally from their 2022 low, has since turned into more than a 40% drop, with something that looks worryingly like a downtrend starting to form. 

Like pretty much every tech stock out there, AMD came under real pressure towards the end of July and the start of August, as concerns spiked that the Fed had held off on cutting rates for too long. However, as the broader market bounced back throughout the rest of last month, AMD's negative divergence only increased. It failed to match its high from July, and while most equities started selling off again last week, AMD has been trending down for nearly 3 weeks. 

So what's behind this lackluster performance, and what does it mean for those of us with an eye for a bargain? There's no doubt the business is performing well from a fundamental point of view, with the company smashing analyst expectations for its last earnings report. But there's a sense that while the report was good in that regard, it wasn't good enough in terms of meeting investors' broader expectations. 

Valuation Concerns

Consider, for example, the company's price-to-earnings (P/E) ratio, which at 160 is definitely up there when compared to its peers. NVIDIA Corporation (NASDAQ: NVDA), arguably AMD's biggest competitor in the semiconductor space, has a P/E ratio of 48, while Qualcomm Inc's (NASDAQ: QCOM) is just 20. When a stock has been underperforming its peers all year, as AMD has, while simultaneously maintaining a relatively inflated P/E ratio, a consistent run of knock-out earnings is needed to justify investors' confidence. AMD simply hasn't delivered that, and the stock has borne the brunt. 

But a funny thing has been happening during all of this. While the bulls have struggled to wrestle control of the stock back from the bears, there's been no shortage of analysts calling AMD a solid buy. For those of us on the sidelines, this poses the question: could we be looking at the mother of all entry opportunities? 

Bullish Outlooks

Take for example the updates from the likes of Wedbush, who reiterated their Outperform rating on the stock after their Q2 earnings, along with their price target of $200. The team over at Susquehanna did the very same, as did Rosenblatt Securities, only with a $250 price target. Considering AMD closed out last week trading below $135, that's pointing to a targeted upside of some 85%. 

For investors with the right appetite for risk, that's an incredibly tempting outlook. However, a lot has changed in the six weeks since those analyst updates, with plenty of unexpected volatility and more selling on AMD's side. 

But their bullish outlook was echoed throughout August, too. Just over a fortnight ago, both Edward Jones and TD Cowen rated the stock a buy, the latter giving AMD a price target of $210. From where the stock was due to start trading this week, that's a targeted upside of more than 50%. 

Weighing Up An Entry

To try and understand just how real this could be, it's important to consider the broader factors at play across the semiconductor industry. An update from the Semiconductor Industry Association last week showed that July's sales were down 11% compared to June's figure, perhaps underscoring the lack of demand for stocks like AMD since before the summer. But even so, the team at Citi still expects sales for the full year to be up 14% year on year, and this is driving their optimism for the industry as a whole and some stocks like AMD in particular. 

Considering they took the opportunity to reiterate their Buy rating on AMD shares, it will be interesting to see how this week plays out. Investors thinking of this as a bargain entry opportunity should look for the stock to remain above last month's low, around $120, even if the rest of the market continues to weaken. If it can begin to consolidate above that, it will be in a strong position to start rallying once equities, in general, begin turning north again.