AMD President and CEO Lisa Su speaks during an AMD event at CES in Las Vegas on January 6, 2020.
Bridget Bennett | Bloomberg | Getty Images
Shares of Advanced Micro Devices rose as much as 3% in extended trading on Tuesday after the chipmaker announced earnings and quarterly guidance that fell short of Wall Street expectations
Here’s how the company did it:
- Merits: 67 cents per share, adjusted, versus 68 cents per share expected by analysts, according to Refinitiv.
- Revenue: $5.57 billion versus $5.62 billion expected by analysts, according to Refinitiv.
Overall, AMD’s revenue rose 29% year over year in its fiscal third quarter, which ended Sept. 24, according to a statement. Net income fell 93% to $66 million, mostly due to AMD’s $49 billion February acquisition of Xilinx, a maker of chips called field-programmable gate arrays.
On Oct. 6, AMD released preliminary results for the fiscal third quarter, which fell short of guidance provided in August due to lower-than-expected chip shipments due to a weaker PC market. The stock fell nearly 14% in its biggest drop in a single trading session since March 2020.
Regarding the guidance, AMD said it sees full-year revenue of $23.50 billion, down from the $26.3 billion guidance the company provided in August. Analysts polled by Refinitiv had expected $23.88 billion. The company lowered its adjusted gross margin guidance to 52% from 54% in August.
AMD said its data center segment generated revenue of $1.61 billion in the fiscal third quarter, up 45% and slightly below the StreetAccount consensus of $1.64 billion. The unit includes contributions from Xilinx and distributed computing startup Pensando, which cost AMD $1.9 billion in an acquisition completed in May.
The chipmaker is seeing healthy demand for shipments of its server chips, codenamed Genoa. AMD plans to launch Epyc data center chips on November 10th.
According to AMD CEO Lisa Su, cloud revenue has more than doubled and increased sequentially, while revenue from server makers targeting large enterprises declined sequentially.
Some companies slowed their purchases due to macroeconomic uncertainty, she said.
The data center business “is looking decent, at least for now, and a fair bit better than what’s going on at Intel,” said Stacy Rasgon, Bernstein’s senior semiconductor analyst, in an interview on CNBC’s “Closing Bell: Overtime” after AMD announced it its results. “There’s a lot of uncertainty about what they would say about data centers, especially after Intel’s report, in which Intel called for the market to decline in the fourth quarter. That’s probably why the stock is up now. The guide itself is pretty weak, but it seems likely that it’s limited to PCs.”
The gaming segment generated revenue of $1.63 billion. That was up about 14% and in line with the consensus of $1.63 billion among analysts polled by StreetAccount. The company announced healthy demand for console chips as the holidays neared for Microsoft and Sony.
The embedded segment, which includes some Xilinx sales, shipped $1.30 billion, up from $79 million in the year-ago quarter and in line with StreetAccount consensus of $1.30 billion.
AMD’s client division, which the chipmaker warned about in October, had sales of $1.02 billion. That was down nearly 40%, but more than the StreetAccount consensus of $1.17 billion. Four days after AMD released preliminary results, technology industry researcher Gartner said PC shipments fell 19.5% in the third quarter, the sharpest decline the company has seen since it began in the mid-1990s. to track the market. During the quarter, AMD announced Ryzen 7000 desktop PC chips and AMD noted positive product reviews.
AMD “worked closely with our customers to reduce downstream inventory,” Su said.
All four segments delivered slightly more revenue than AMD expected in its October warning.
Despite the after-hours volatility, AMD stock is down 58% so far this year, while the S&P 500 index is down 19% over the same period.
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