Advanced Micro Devices' (AMD -5.44%) year went from bad to worse after the company released preliminary results for the third quarter of 2022 on Oct. 6. Shares of the chipmaker fell over 13%.

AMD investors pressed the panic button hard after the company revealed that its quarterly revenue would land at an estimated $5.6 billion at the midpoint of its updated guidance range. The company originally expected $6.7 billion in Q3 revenue, but a weak PC (personal computer) market has knocked the wind out of AMD's sails.

Thanks to the latest setback, AMD stock has now lost nearly 60% of its value in 2022 and is trading at 52-week lows. Investors may be tempted to buy this high-flying chipmaker following its sharp pullback. It is trading at an attractive valuation and set to grow impressively despite the PC market's weakness.

But should they give in to the temptation? Let's find out.

There are some silver linings

Though AMD's updated revenue guidance of $5.6 billion for Q3 is a huge miss over its prior expectation, its top line is still on track to increase 29% year over year. Of course, that's a big drop over the earlier expectation of 55% top-line growth, but it is worth noting that the company can deliver respectable growth despite the headwinds in the PC market.

Specifically, AMD's revenue from the client processor segment, which includes sales of CPUs (central processing units) used in desktops and notebooks, was down 40% year over year to $1 billion. AMD also saw a drop in the average selling price of its processors last quarter, which will lower its non-generally accepted accounting principles (non-GAAP) gross margin to 50% from the prior expectation of 54%.

CEO Lisa Su remarked that "macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain." The good part is that AMD's diversified businesses helped it overcome the same to quite an extent.

For instance, AMD's data center revenue increased 45% year over year to $1.6 billion last quarter. Additionally, the company's gaming revenue was up 14% to $1.6 billion despite the weakness in the graphics card market. The embedded business also delivered $1.3 billion in revenue, powered by the acquisition of Xilinx, which was completed earlier in the year.

So it wasn't all doom and gloom for AMD last quarter. Investors will now be looking to Nov. 1, when AMD releases its complete Q3 results, and all eyes will be on the guidance. Don't be surprised to see gloomy guidance from the company; according to IDC, the PC market is expected to contract by 12.8% this year. The situation is likely to improve slightly in 2023, with shipments of PCs and tablets expected to drop just 2.6% before a recovery in 2024.

As such, the PC market's weakness could cause AMD stock to head lower. But investors looking for a top semiconductor stock may want to add AMD to their watchlists. Its diversified customer base and market share gains in the client processor space could eventually lead to a turnaround, and savvy investors would want to buy the stock before that happens.

An attractive valuation, but investors need patience

AMD is now trading at less than 25 times trailing earnings and just 12 on a forward basis. That's close to the Nasdaq 100's trailing price-to-earnings ratio of 24 and a sharp discount to the index's forward earnings multiple of 21.

Analysts still expect a big bump in the company's earnings. But the gloomy PC market and negative sentiment around the semiconductor industry could send AMD stock lower, giving investors an opportunity to buy the stock at a cheaper valuation.

Given that AMD has solid catalysts that could help it grow immensely in the next five years, it would be a good idea to accumulate this semiconductor stock for long-term gains if it falls further and becomes cheaper.