AMD stock falls as revenue forecast falls below street consensus

Shares of Advanced Micro Devices Inc. In the extended session on Tuesday after the chipmaker’s revenue forecast fell below the Wall Street consensus after posting record sales, beating street expectations and reporting a spike in data center sales.

“Taking a step back, while there has been a bit more slickness in the PC market in recent months, we believe we are in a very good position to navigate the current environment based on the strength of our current product suite and upcoming product launches,” said Lisa Su, CEO of AMD. , to analysts on a conference call.

“Despite the current macroeconomic environment, we are seeing continued growth in the second half of the year, highlighted by shipments of next-generation 5nm products and supported by our diversified business model,” Su told analysts.

AMD forecast third-quarter revenue of $6.5 billion to $6.9 billion, and brought its revenue forecast of $26 billion to $26.6 billion for the year.

Analysts polled by FactSet estimated revenue at $6.84 billion for the third quarter, and $26.21 billion for the year. The company also bolstered its gross margin forecast to 54% for the year. Back in February, AMD forecast gross margins of 51% for 2022, and revenue of about $21.5 billion. At the time, Wall Street analysts had a consensus on revenue of $19.29 billion.

Sue told analysts on the call that third-quarter forecasts indicate that data center sales are driving revenue growth, with PC sales declining in their mid-teens. In the fourth quarter, Su said the dynamic should remain but that AMD will launch its new 5nm products that quarter.

Nanometers, or “nanometres,” refer to the size of each transistor that passes on a computer chip, and the general rule is that smaller transistors are faster and more energy efficient. With AMD moving to the 5nm chip, Intel struggled to release a 7nm chip.

Shares were down 4% after hours, after rising 2.6% to end the regular session at $99.29.

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AMD AMD,
+ 2.59%
It reported second-quarter net income of $447 million, or 27 cents a share, compared to $710 million, or 58 cents a share, in the same period last year. Adjusted earnings, which excludes stock-based compensation expense and other items, was $1.05 per share, compared with 63 cents per share in the same period last year.

The company posted record revenue for the eighth consecutive quarter: Revenue rose 70% to a record $6.55 billion from $3.85 billion in the same period last year.

Analysts polled by FactSet expected $1.03 per share on revenue of $6.53 billion, based on AMD’s forecast of $6.3 billion to $6.7 billion.

AMD reported sales based on new product categories, including a breakdown of data center revenue for the first time. Revenue from the data center rose to $1.49 billion from $813 million last year, an increase of 83%.

Last week, Intel Corp. INTC,
-2.57%
It reported dismal results and lowered its forecast for the year, posting a 16% drop in data center sales to $4.6 billion and forecasting data center sales to grow more slowly than the market as a whole. In other words, because Intel lost about $900 million in data center sales, AMD raised an additional $673 million in data center sales.

Customer sales increased 24% to $2.15 billion from $1.73 billion a year earlier; Game sales increased 32% to $1.66 billion from $1.26 billion; Combined sales rose to $1.26 billion from $54 million in the same quarter last year, before the company acquired Xilinx again in February.

Upon acquiring Xilinx, AMD brought in so-called Field Programmable Gate Array, or FPGAs, chips that can be configured by the customer or designer after they are manufactured. These chips are used as accelerators in data centers to boost computing power and improve energy efficiency in existing physical spaces.

Adjusted gross margins came in at 54% for the second quarter, up from 48% last year and the first quarter. Meanwhile, rival Intel reported gross margins of 44.8% for the second quarter and now expects 49% for the year, down from the 52% to 53% previously forecast by Intel CFO David Zinsner, or “more than 50% overall.” Comfortable” promised by CEO Pat Gelsinger.

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Back in June, AMD said on its analysis day that it expects average annual revenue growth of around 20% over the next three to four years.

Over the past 12 months, AMD’s stock is down 8%. During the same period, the PHLX Semiconductor SOX index,
-0.12%
Down 11%, the S&P 500 SPX Index,
-0.67%
down 6%, the high-tech Nasdaq Composite Index,
-0.16%
It has decreased by 15%.

Elsewhere in the chip segment this earnings season is Texas Instruments Inc’s TXN subsidiary.
-0.88%
Results and forecasts beat Wall Street estimates at the time, while Qualcomm Inc’s QCOM outperformed.
-0.27%
Expectations were short due to poor phone sales.

Chip-making supplier Lam Research Corp. LRCX,
-0.03%
Wall Street topped estimates for the quarter and forecast expectations were mostly above consensus, while KLA Corp. KLAC competition,
-0.76%
It released a range of expectations that was partially below Wall Street estimates at the time. Prior to that, ASML Holding NV ASML,
-2.17%
It lowered its revenue forecast for the year after the company said express orders will push the revenue generation of those sales into next year.

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