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Advanced Micro Devices (AMD) exceeded expectations for the second quarter, driven by increased sales of chips for artificial intelligence. However, the company’s stock fell due to disappointing guidance. In the June quarter, AMD reported adjusted earnings of 58 cents per share on sales of $5.36 billion, beating analyst predictions. Nevertheless, compared to the previous year, earnings dropped 45% and sales declined 18%. CEO Lisa Su highlighted the successful launch of 4th Gen Epyc and Ryzen 7000 processors and the significant increase in AI engagements. AMD is set to launch its MI300 accelerators in Q4. For the current quarter, AMD forecasts revenue of $5.7 billion, slightly below analyst expectations. ALISSA CORAM, ED CARSON reported
Advanced Micro Devices (AMD) Beats Wall Street Expectations in Q2, Fueled by AI Chip Sales
Advanced Micro Devices (AMD) reported better-than-expected results for the second quarter, driven by strong sales of chips for artificial intelligence (AI). However, despite the positive earnings report, AMD’s stock fell due to disappointing guidance for the upcoming quarter.
Q2 Financial Performance
In the June quarter, AMD earned an adjusted 58 cents per share on sales of $5.36 billion. This surpassed analysts’ expectations of 57 cents per share on sales of $5.32 billion, demonstrating the company’s strong performance. However, compared to the previous year, AMD’s earnings dropped by 45% and sales declined by 18%, indicating a challenging market environment.
CEO Lisa Su expressed her satisfaction with the company’s results, stating, “We delivered strong results in the second quarter as 4th Gen Epyc and Ryzen 7000 processors ramped significantly.” She also highlighted the significant increase in AI engagements during the quarter, with multiple customers initiating or expanding programs to support future deployments of Instinct accelerators at scale. Additionally, Su mentioned that AMD is on track to launch and scale production of its MI300 accelerators in the fourth quarter.
Stock Performance
Despite the positive earnings report, AMD’s stock fell by 7% to close at $109.35. During the regular session on Tuesday, the stock rose by 2.8% to end at $117.60. Currently, AMD’s stock is in a consolidation pattern with a buy point of $132.83, according to IBD MarketSmith charts.
Q3 Forecast and Analyst Ratings
For the current quarter, AMD forecasted revenue of $5.7 billion, falling short of analyst expectations for $5.82 billion. However, the company expects double-digit sequential growth in its data center and client segment revenues, driven by increasing demand for its Epyc and Ryzen processors. Chief Financial Officer Jean Hu mentioned that this growth will be partially offset by declines in the gaming and embedded segments.
Analyst Rick Schafer from Oppenheimer maintained a neutral rating on AMD stock, saying, “We remain sidelined as AMD’s AI strategy proves out.” On the other hand, Barclays analyst Blayne Curtis maintained an overweight rating on AMD stock with a price target of $145. Curtis believes that AMD’s conservative guidance should take a back seat to an expected strong ramp in AI business next year.
Position in the Semiconductor Industry
Advanced Micro Devices currently ranks seventh out of 36 stocks in IBD’s fabless semiconductor industry group. The company’s stock has an IBD Composite Rating of 91 out of 99, indicating its strong fundamentals and technical metrics. Additionally, AMD is listed on the IBD Tech Leaders list, further solidifying its position as a leading player in the industry.
Overall, despite the stock’s decline after the earnings report, Advanced Micro Devices continues to show promise with its strong performance in the AI chip market. As the company prepares to launch its MI300 accelerators and capitalize on increasing demand for its processors, it remains well-positioned for future growth.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Please consult with a professional advisor before making any investment decisions.
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