Jan 31 (Portal) – US chipmaker Advanced Micro Devices Inc (AMD.O) on Tuesday reported sales that beat Wall Street’s targets and said it expected business to improve in the second half of the year, reflecting the Excited investors who saw the company gain over rival Intel.
Shares are up about 1.5% in after-hours trading. While AMD’s guidance fell short of expectations, it wasn’t as weak as some feared. Recent earnings reports for Intel and AMD indicate that the once fast-growing data center business will pose a greater challenge for all chipmakers as companies adjust spending.
“AMD has remained resilient and even made gains on its data center chips…over Intel,” said Wayne Lam, an analyst at CCS Insight.
Chief Executive Lisa Su said she is confident that AMD will continue to gain market share this year and that the second half will be stronger than the first.
While Intel Corp. (INTC.O) still dominates the market for PC and server processing chips with a share of over 70%, that share has declined from more than 90% in 2017, according to technology research firm IDC. A large part of this share was taken over by AMD.
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Revenue from AMD’s data center segment rose 42% to $1.7 billion in the fourth quarter, which offset a 51% decline in revenue in its client segment, which includes PCs, to $903 million.
According to data from research firm IDC, PC shipments in 2022 fell 16.5% to 292.3 million units.
Su said AMD expects the PC market to decline 10% this year and will “continue to ship below consumption in the first quarter to reduce downstream inventories.”
“Q1 should be the bottom for us in PCs and then grow from there into Q2 and then into the second half,” Su said on the earnings call.
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The slumping PC business clouded Intel’s first-quarter outlook, and Intel CEO Pat Gelsinger said he’s seeing “literally some of the biggest inventory corrections we’ve ever seen in the industry.”
“I think we’re going to have at least a few more quarters of pain across the industry before things change,” said Anshel Sag, an analyst at Moor Insights & Strategy.
“We believe AMD’s results continue to show weakness in the PC and gaming markets,” said Angelo Zino, analyst at CFRA Research. “Furthermore, we expect sales levels in both segments to bottom out in the first half of this year.”
AMD had already begun underdelivering last year in response to falling processor demand.
That drop prompted chipmakers to trim their revenue forecasts, prompting a sell-off in chip stocks. AMD’s stock fell 55% over the past year, underperforming the Philadelphia SE Semiconductor Index (.SOX) during an industry downturn
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Fourth-quarter adjusted revenue increased 16% to $5.60 billion. According to data from Refinitiv, analysts on average expected sales of $5.50 billion.
The company is forecasting revenue of $5.3 billion for the current quarter, plus or minus $300 million. According to data from Refinitiv, analysts on average expected sales of $5.48 billion.
Reporting by Chavi Mehta in Bengaluru Jane Lanhee Lee in Oakland, California; Edited by Anil D’Silva, Jonathan Oatis and David Gregorio
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