Tech stocks have fallen out of favor in 2022, evident by the Nasdaq-100 Technology Sector Index falling 39% since January. Significant declines in consumer demand have hit the PC market hard and spooked investors, leading stocks of companies such as Advanced Micro Devices (AMD -5.44%) to sink 56% year to date. 

Despite declines in the market, AMD has diversified its business to include multiple aspects of the market. As a result, the company grew its revenue by 69% from 2020 to 2021, and analysts expect it to gain another 59% in 2022. They anticipate AMD to grow all while it contends with supply constraints and slowed demand.

AMD's varied business is a major green flag for investors, but the company could be held back in 2022 by its upcoming lineup of products. Here's why. 

Green flag: A varied business 

Although AMD's share price has fallen significantly this year, its revenue hasn't, largely thanks to its multifaceted business. The company categorizes its earnings into four fairly even segments, with revenue in the second quarter of 2022 split as follows: 22.6% data centers, 32.8% clients, 25.4% gaming, and 19.2% embedded products.

Meanwhile, Nvidia (NASDAQ: NVDA), one of its biggest competitors, has a much less varied business. Its top-performing segments, gaming and data centers, were responsible for 30% and 56.7%, respectively, of its revenue in its second quarter. As a result, the company has suffered considerably from a decline in the PC market, with its third-quarter 2022 revenue projections set at $6.7 billion on a Wall Street expectation of $8.1 billion.

Moreover, Advanced Micro Devices' diversified strategy has helped it stave off declines in the PC gaming market with its push into consoles. The company provides semi-custom chips for Sony's PlayStation 5, Microsoft's Xbox Series X/S, and Valve's Steam Deck. The newest generation of Xbox and PlayStation consoles have sold in record numbers since their release, with 14.9 million Xbox Series X/S sold by May 2022 and 20 million PS5 consoles by June.

The success of these consoles led AMD to report a 70% increase in year-over-year revenue in Q2 2022, with its gaming segment boosting the figure with a rise of 32%. 

Red flag: A questionable product lineup 

Although AMD offers a diverse business with multiple well-performing segments, investors might need to prepare for a slight dip in its Client segment over the next few months. The dip might come on the back of a lackluster response to its new lineup of processors (CPUs). On Aug. 30, the company announced its new generation of CPUs, the Ryzen 7000-series. The release is AMD's biggest processor refresh since the introduction of its Ryzen 1000-series in 2017. As a result, the 7000-series requires consumers to replace several components of their PCs to utilize the newest tech.

PC users looking to purchase AMD's new processors will need to upgrade to the company's recently released AM5 motherboard and to DDR5 ram. As consumers tend to upgrade PC components in stages, AMD's generational shift comes with a hefty price tag, as it's necessary to upgrade all three simultaneously. 

Since 2017, AMD's Ryzen series has led it to consistently steal CPU market share from Intel, growing from 18.1% market share in the first quarter of 2017 to 36.4% in Q2 2022. Meanwhile, Intel's market share has fallen from 81.9% to 63.5% in the same period. AMD accomplished this with its consumer-friendly strategy of allowing its motherboards to be carried over between multiple generations of processors, while Intel often forces users to purchase new motherboards with every processor refresh. Furthermore, AMD's competitive processor pricing helped to grow its market share.

However, the company's 7000-series has consumers criticizing it as too expensive, especially with the need to upgrade the other components. Additionally, Intel has stepped in with a new lineup of processors -- its 13th-gen Raptor Lake series -- that offers more total cores and higher clock speeds at lower price points than AMD. 

Consequently, consumers are eyeing Intel's upcoming CPUs while also considering AMD's previous 5000-series released in 2021 rather than the 7000-series. It's too soon to know how badly AMD's revenue would be affected by consumer sentiment, but its Client segment is the best performing part of its business, so a dip is certainly possible.

Should you buy AMD stock?

When considering the long-term prospects of AMD's business, its future is brighter than that of many of its competitors. The state of the market has dragged down the price of AMD stock, but its price-to-earnings ratio is lower than it has ever been, suggesting its financial health is in much better standing than its share price would have you think. 

AMD might be heading into a slight slump in CPU sales, but it's unlikely to be down for long. So at its current stock price, investors have a chance to buy AMD at a bargain and let their money work for them over the next several years.