AMD shares rose on Wednesday after the chipmaker reported stronger-than-expected fourth-quarter sales of data center chips. but modern micro devices (AMD) dampened this news with a soft forecast for the current period.
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The Santa Clara, Calif.-based company said late Tuesday that it earned an adjusted 69 cents a share on sales of $5.6 billion for the December quarter. Analysts polled by FactSet had expected AMD to earn 67 cents a share on sales of $5.51 billion.
Year over year, AMD’s earnings fell 25% while sales rose 16%. The acquisition of Xilinx boosted sales and helped offset declining sales of PCs and gaming chips.
In the fourth quarter, AMD PC chip sales fell 51% year over year to $903 million as demand for personal computers was weak. Gaming segment revenue fell 7% to $1.6 billion.
Meanwhile, data center chip sales rose 42% to $1.7 billion, driven by Epyc server processors.
AMD stock rises after report
For the current quarter, AMD is forecasting revenue of $5.3 billion, down 10% year over year. Analysts were looking for $5.5 billion in the first quarter.
In this morning’s stock market trading, AMD shares are up 7% to 80.42. During Tuesday’s regular session, AMD shares rose 3.7% to close at 75.15.
“While the demand environment is mixed, we are confident that we can gain market share in 2023 and deliver long-term growth based on our differentiated product portfolio,” Chief Executive Lisa Su said in a press release.
Wall Street split over news
AMD’s fourth quarter report offered something for both bulls and bears. At least three Wall Street analysts have raised their price targets for AMD shares, while three others have lowered their targets.
AMD expects the PC market to bottom out in the first quarter. The company also sees cloud computing customers working to digest chip inventory in the first half of the year.
AMD wants to counteract the headwind in the overall market by taking over shares of the competitor intel (INTC). But those efforts are likely to eat into the company’s profit margins, analysts say.
According to the IBD Stock Checkup, AMD stock ranks 12th out of 34 stocks in IBD’s fabless semiconductor industry group. It has a mediocre IBD Composite rating of 72 out of 99. The Composite rating evaluates a stock’s key growth metrics relative to all other stocks, regardless of industry group.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories about consumer technology, software and semiconductor stocks.
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