What happened

Week to date, shares of Advanced Micro Devices (AMD 2.44%) are down 16.5% as of 10:38 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence.

One analyst issued a bullish forecast for AMD on Thursday, but that was overshadowed by a disappointing earnings report from Micron Technology that weighed on semiconductor stocks toward the end of the week. 

So what

Micron is a leading supplier of memory and storage chips and announced a record quarter. However, the company said it would pull back on expanding capacity to account for the declining demand trends in the consumer PC market.  

AMD has been doing well in the enterprise market, taking market share away from Intel in server chips. But investors are selling ahead of the expectation that the economy is heading into a recession. However, this is sending AMD stock down to a bargain valuation relative to its long-term growth opportunities.

Now what

In its last earnings report, issued in May, AMD said it expects full-year revenue to grow approximately 60% year over year. This is partly driven by the additional revenue from the Xilinx acquisition completed in the first quarter, which positions AMD for growth in new markets, such as connected devices, artificial intelligence applications, and robotics.

Analyst Gus Richard at Northland Capital Markets issued a positive note on AMD on Thursday, noting that the company is well positioned to have a relatively good year in 2023 due to its competitive position in the server market.

Fears of slowing growth in the near term give investors a great buying opportunity. AMD shares now trade at an attractive valuation of 16.7 times this year's earnings estimates. This is a big discount compared to the level the shares were at a year ago, when investors were thinking about the company's long-term prospects instead of worrying about the near-term economic trends.