AMD beats earnings estimates, misses Q4 guidance

AMD (AMD) reported its third quarter earnings Tuesday after the bell, however not all of the chips fell its manner.

Whereas it beat estimates on the highest and backside line, the corporate missed on its This autumn steering. AMD’s shares fell about 4% in after-hours buying and selling earlier than gaining again the loss.

In Q3, AMD reeled in $5.8 billion in income and $0.70 in EPS, however forecasted $6.1 billion in income for the following quarter, lacking analysts’ expectations of $6.4 billion.

Amid the AI growth, AMD is enjoying catch-up with Nvidia (NVDA), which at the moment guidelines the roost relating to AI chips. However the underdog has been making headway — AMD CEO Lisa Su just lately made the case that the AI discipline is extra extensive open than it’d seem proper now.

“I am not a believer in moats when the market is transferring as quick as this,” Su informed the viewers on the 2023 Code Convention. “When you consider moats, … [they are in] markets the place persons are probably not wanting to alter issues so much.”

Wanting forward, AMD’s latest information middle chip, the MI300, might be the push it must slim the hole on the competitors.

The corporate is betting {that a} ramp-up of its MI300 chips will give it a bit of the profitable information middle enterprise, as tech companies race to safe energy to coach their AI fashions. “This progress would make MI300 the quickest product to ramp to $1 billion in gross sales in AMD historical past,” Su mentioned in a name with analysts.

TD Cowen’s Matthew Ramsay, writing on Oct. 16, famous that whereas this may be a “uneven” earnings season for AMD and opponents like Broadcom (AVGO) and Marvell (MRVL), these corporations are arrange for robust progress by the top of 2024 and into 2025.

“We proceed to emphasise that the overwhelming majority of those semis franchises … are high-quality, high-margin companies and long-term secular developments stay fairly optimistic,” he wrote.

Final Friday, Cathie Wooden’s Ark Make investments purchased greater than 50,000 shares of AMD, a purchase order valued at greater than $5 million.

The chipmaker’s shares are up about 50% 12 months so far.

LAS VEGAS, NEVADA - JANUARY 04:  AMD Chair and CEO Dr. Lisa Su delivers a keynote address at CES 2023 at The Venetian Las Vegas on January 04, 2023 in Las Vegas, Nevada. CES, the world's largest annual consumer technology trade show, runs from January 5-8 and features about 3,100 exhibitors showing off their latest products and services to more than 100,000 attendees.  (Photo by David Becker/Getty Images)

AMD Chair and CEO Dr. Lisa Su delivers a keynote handle at CES 2023 at The Venetian Las Vegas on Jan. 4, 2023 in Las Vegas. (David Becker/Getty Photos)

The earnings rundown

Listed below are the important thing numbers that AMD reported as in comparison with analysts’ expectations compiled by Bloomberg:

Income: $5.8 billion precise versus $5.7 billion anticipated

Adjusted EPS: $0.70 precise versus $0.68 anticipated

Adjusted working margin: 22% precise versus 21.6% anticipated

This autumn income outlook: ~$6.1 billion precise versus $6.4 billion anticipated

Presently, Wall Road analyst suggestions for AMD shake out to 39 Buys, 12 Holds, and one Promote.

AMD’s gaming income got here in at $1.5 billion, down 8% 12 months over 12 months and lacking analysts’ expectations of $1.53 billion. AMD’s gaming chips are utilized in online game consoles like Sony’s PlayStation 5.

The corporate’s embedded phase income for Q3 was $1.2 billion, amid a still-sluggish PC market. The quantity marks a decline of 5% 12 months over 12 months and falls in need of estimates of $1.31 billion.

AMD will hold AI and information facilities as its focus in 2024. “We will certainly improve each R&D funding and the go-to-market funding to handle these alternatives,” Su informed analysts. “The way in which to consider it’s that our goal is to drive top-line progress, a lot sooner than OpEx progress, so our funding can drive long-term progress.”

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Comply with her on X, previously Twitter, at @agarfinks and on LinkedIn.

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