AMD shares fall as second-quarter forecast misses expectations

Shares of Advanced Micro Devices experienced a decline yesterday following a second-quarter forecast that failed to meet Wall Street expectations. This overshadowed the company executives’ optimism that the beleaguered chip market will begin to recover in the latter half of 2023. After AMD announced first-quarter sales below analyst predictions for PC and data centre chips, their two most significant segments, shares fell by 7% during extended trading hours.

The company’s results have dampened hopes raised by Intel Corp executives last week, who anticipated a recovery in the PC market during the second half of the year, which would subsequently increase Intel’s profit margins. AMD’s performance indicates that the consumer PC segment continues to struggle, while the business PC segment is faring better, according to Mikako Kitagawa, an analyst at research firm Gartner.

During a conference call with investors, Su expressed confidence in the prospects for business growth in both the PC segment and data centres throughout the latter half of the year. This growth is anticipated to be partially driven by a chip called MI300, which will compete with Nvidia Corp’s flagship chips for artificial intelligence. Su noted increasing customer interest in the MI300, which will begin shipping later this year.

“We do believe that we will start ramping up revenue in the fourth quarter with Cloud AI customers, and then it’ll be more meaningful in 2024,” Su commented. However, the company is still grappling with the current state of the PC market. Dean McCarron, the head of chip market tracking firm Mercury Research, stated that both AMD and Intel are reducing the number of chips they sell to PC manufacturers, in the hope that these clients will reduce the surplus of chips in their inventories.

McCarron added, “The main takeaway here is that Q1 revenues from both Intel and AMD do not reflect the market, and you can’t make any accurate judgments about which way either company is headed.” AMD has projected revenue of approximately US$5.3 billion, plus or minus US$300 million for the current quarter, while analysts polled by Refinitiv were anticipating revenue of US$5.48 billion.

Revenue for the quarter ending April 1 totalled US$5.35 billion, compared to the estimated US$5.3 billion. Revenue from AMD’s client segment, which encompasses personal computers, fell 65% to US$739 million in the first quarter. Meanwhile, data centre segment revenue remained unchanged at US$1.3 billion during the same period, reports Channel News Asia.