AMD shares fall as first-quarter forecast comes in light

Lisa Su, president and CEO of AMD, talks in regards to the AMD EPYC processor throughout a keynote deal with on the 2019 CES in Las Vegas, Nevada, U.S., January 9, 2019. 

Steve Marcus | Reuters

AMD reported fourth-quarter earnings on Tuesday that had been in line with analyst expectations, whereas the corporate’s income beat estimates, however AMD provided a first-quarter forecast that fell in need of expectations.

AMD inventory slid greater than 5% in prolonged buying and selling, even after the corporate gave a optimistic replace on how rapidly its new AI chips are promoting.

Here’s how the corporate did versus LESG (previously Refinitiv) consensus estimates for the quarter ended in December:

  • EPS: $0.77 per share, adjusted, versus $0.77 per share anticipated
  • Revenue: $6.17 billion, versus $6.12 billion anticipated

For the primary quarter, AMD mentioned it expects about $5.4 billion in gross sales, plus or minus $300 million, whereas analysts had been in search of income of $5.73 billion. AMD added that it anticipated a few of its main companies, together with PC chips, to say no sequentially through the quarter. It mentioned that its information heart income could be flat as server CPU declines could be offset by AI GPU gross sales.

“For 2024, we anticipate the demand setting to stay blended,” AMD CEO Lisa Su mentioned on a name with analysts.

Net revenue in the fourth quarter was $667 million, or $0.41 per share, versus $21 million, or $0.01 per share a 12 months in the past.

AMD makes graphics processing models, or GPUs, that are wanted to coach and deploy generative synthetic intelligence fashions. While that market is at present dominated by Nvidia, AMD has said that its new AI chips launched final 12 months will problem Nvidia’s H100 GPUs for some functions, and buyers are looking for vital development in the corporate’s information heart section over the following few years.

AMD gave a optimistic replace on its AI chips gross sales. In October, AMD mentioned it anticipated $2 billion in server GPU gross sales in 2024. On Tuesday, it mentioned it now expects $3.5 billion in information heart GPU gross sales beneath its “Instinct” model this 12 months.

“In cloud, we’re working carefully with Microsoft, Oracle, Meta and different massive cloud prospects on Instinct GPU deployments powering each their inside AI workloads and exterior choices,” Su mentioned.

Data heart, which incorporates server CPUs and AI chips, rose 38% on an annual foundation to $2.28 billion in gross sales. It’s now firmly AMD’s largest enterprise and the corporate mentioned that a lot of the rise in income was attributable to “robust development” for gross sales of its Instinct graphics processors, that are used for AI. However, AMD’s total efficiency in the enterprise was in line with a $2.29 billion FactSet estimate for the Data Center enterprise.

Historically, AMD’s predominant enterprise has been central processors, or CPUs, for PCs and servers. Compared to AI chips, that a part of the semiconductor business has been flat or shrinking over the previous few years, as PC gross sales have suffered post-pandemic.

AMD’s shopper group, which is comprised largely of chips for PCs and laptops, rose 62% year-over-year to $1.46 billion in gross sales, which the corporate mentioned was boosted by latest chip launches.

Sales in AMD’s gaming section, which incorporates “semi-custom” processors for Microsoft Xbox and Sony Playstation consoles, fell 17%. AMD blamed slower console gross sales, and mentioned it anticipated semi-custom income to say no by a “vital” double-digit share in the present quarter.

AMD’s embedded section, which incorporates chips for networking, reported $1.1 billion in gross sales, down 24% on an annual foundation.

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