AMD (AMD) reported its third quarter earnings Tuesday after the bell, but not all the chips fell its way.
While it beat estimates on the top and bottom line, the company missed on its Q4 guidance. AMD’s shares fell about 4% in after hours trading before gaining back the loss.
In Q3, AMD reeled in $5.8 billion in revenue and $0.70 in EPS, but forecasted $6.1 billion in revenue for the next quarter, missing analysts’ expectations of $6.4 billion.
Amid the AI boom, AMD is playing catch-up with Nvidia (NVDA), which currently rules the roost when it comes to AI chips. Recently, AMD CEO Lisa Su made the case that the AI field is more wide open than it might appear right now — an idea AMD seems to be betting on.
“I’m not a believer in moats when the market is moving as fast as this,” Su told the audience at the 2023 Code Conference. “When you think about moats, … [they are in] markets where people are not really wanting to change things a lot.”
Looking ahead, AMD’s newest data center chip, the MI300, may help the company close the gap on their competition. “AMD is particularly well-positioned to thrive in [second half of 2024] as its AI revenues ramp at the same time,” wrote Wedbush’s Matt Bryson, who rates the stock Outperform, on Oct. 25.
“Our data center business is on a significant growth trajectory based on the strength of our EPYC CPU portfolio and the ramp of Instinct MI300 accelerator shipments to support multiple deployments with hyperscale, enterprise and AI customers,” Su said in a statement.
TD Cowen’s Matthew Ramsay, writing on Oct. 16, noted that while this might be a “choppy” earnings season for AMD and competitors like Broadcom (AVGO) and Marvell (MRVL), these companies are set up for strong growth by the end of 2024 and into 2025.
“We continue to emphasize that the vast majority of these semis franchises … are high-quality, high-margin businesses and long-term secular trends remain quite positive,” he wrote.
Last Friday, Cathie Wood’s Ark Invest bought more than 50,000 shares of AMD, a purchase valued at more than $5 million.
The chipmaker’s shares are up about 50% year to date.
The earnings rundown
Here are the key numbers that AMD reported as compared to analysts’ expectations compiled by Bloomberg:
Revenue: $5.8 billion actual versus $5.7 billion expected
Adjusted EPS: $0.70 actual versus $0.68 expected
Adjusted operating margin: 22% actual versus 21.6% expected
Q4 revenue outlook: ~$6.1 billion actual versus $6.4 billion expected
Currently, Wall Street analyst recommendations for AMD shake out to 39 Buys, 12 Holds, one Sell.
AMD’s gaming revenue came in at $1.5 billion, down 8% year-over-year and missing analysts’ expectations of $1.53 billion. AMD’s gaming chips are used in video game consoles like Sony’s PlayStation 5.
The company’s embedded segment revenue for Q3 was $1.2 billion, amid a still sluggish PC market. The number marks a decline of 5% year-over-year and falls short of estimates of $1.31 billion.
This is breaking news, check back for updates.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on X, formerly Twitter, at @agarfinks and on LinkedIn.
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