What happened

Shares of Advanced Micro Devices (AMD -5.44%) fell 24.9% in June 2022, according to data from S&P Global Market Intelligence. The microchip designer's stock has now dropped 47.8% in 2022, including a 20.6% plunge in January and a 21.8% haircut in April. The market has not exactly rolled out the red carpet for high-flying growth stocks in recent months, and AMD is also facing more-specific headwinds on top of that marketwide trend.

So what

Macroeconomic fears and concrete marketwide problems powered some of AMD's largest single-day drops last month. Oversize inflation readings point to rising costs of doing business. Furthermore, the same economic pressure might lead to lower demand for AMD's products as consumers and companies tighten their belts.

In a completely different corner of the market, falling cryptocurrency prices have cooled down the formerly piping-hot demand for crypto-mining processors and systems. AMD's graphics processing units (GPUs) happen to be good at churning through the mining algorithm for Ethereum (ETH 2.35%). That inspired Ethereum miners to snap up every cost-effective GPU they could find for a few months, leading to shortages and sky-high unit prices for gamers and professionals who just wanted to use the graphics processors for their intended purpose.

That boom is over, crypto miners are flooding the market by reselling their used GPUs, and the downturn will take another big step when Ethereum ends its reliance on mining rigs to validate transactions.

The stock fell more than 5% on June 28 as GPU prices dropped due to a massive increase in resales.

Now what

AMD claims that crypto mining accounts for a small portion of the company's sales, but we're about to find out exactly how much that market really matters. The company will report second-quarter results near the end of July. While the crypto-based impact should be small on this period, which ended on June 25, management's outlook for the third quarter and beyond will set the record straight.

In the meantime, AMD is generating the richest free cash flows in the company's history, and the stock is moving closer to a realistic valuation on a cash-flow basis. Mind you, AMD shares still aren't cheap even after the massive correction in recent months. At the same time, you shouldn't expect a pedal-to-the-metal growth stock to trade at deep-discount value prices.

Factoring in the double-digit year-over-year growth percentages on both the top and bottom lines, AMD's stock is starting to make sense as long as you're prepared for a bumpy ride in the months ahead.