AMD stock slides as revenue forecast falls below Street Consensus – MarketWatch | Omd Cialis

Shares of Advanced Micro Devices Inc. declined in Tuesday’s extended session after the chipmaker’s revenue forecast fell below Wall Street consensus after reporting record sales, beating Street’s expectations and reporting a huge jump in data center sales was.

“To take a step back, although the PC market has continued to weaken in recent months, we believe we are very well positioned to navigate the current environment given the strength of our existing product portfolio and upcoming product launches,” Lisa Su, AMD CEO told analysts in a conference call.

“Despite the current macro environment, we see continued growth in the second half, highlighted by our next-generation 5-nanometer product shipments and supported by our diversified business model,” Su told analysts.

AMD forecast third-quarter revenue of $6.5 billion to $6.9 billion and reiterated its revenue guidance of $26 billion to $26.6 billion for the year.

Analysts polled by FactSet estimated revenue at $6.84 billion for the third quarter and $26.21 billion for the year. The company also reiterated its gross margin guidance of 54% for the year. Back in February, AMD forecast 51% gross margins and about $21.5 billion in revenue for 2022. At the time, Wall Street analysts had a consensus of $19.29 billion in revenue.

Su told analysts on the conference call that the third-quarter outlook implies that data center sales will lead revenue growth while PC sales decline in the mid-teens. In the fourth quarter, Su said the momentum should be maintained, but that AMD will release its new 5nm products this quarter.

Nanometers or “nm” refers to the size of each transistor on a computer chip, with the general rule being that smaller transistors use electricity faster and more efficiently. While AMD is moving to its 5nm chip, Intel is struggling to get its 7nm chip out.

Shares are down about 7% after hours, after rising 2.6% to end the regular session at $99.29.

In-Depth: Are Chip Stocks Set for a Short Push or Just More Drops? Wall Street doesn’t seem sure

amd amd,
+2.59%
reported net income of $447 million, or 27 cents a share, for the second quarter, compared to $710 million, or 58 cents a share, in the same period last year. Adjusted earnings, which exclude stock-based compensation expense and other items, were $1.05 per share, compared to 63 cents per share in the prior-year period.

The company reported record sales for the eighth straight quarter, with sales up 70% to a record $6.55 billion from $3.85 billion in the prior-year period.

Analysts polled by FactSet were forecasting $1.03 per share on revenue of $6.53 billion, based on AMD’s guidance of $6.3 billion to $6.7 billion.

AMD reported revenue based on new product categories, including data center revenue breakdown for the first time. Data center revenue increased to $1.49 billion from $813 million a year ago, an 83% increase.

Last week Intel Corp. INTC,
-2.57%
reported dismal results and lowered its outlook for the year, noting a 16% decline in data center revenue to $4.6 billion and forecasting that its data center revenue would grow at a slower pace than the broader market. In other words, while Intel lost about $900 million in data center sales, AMD made an additional $673 million in data center sales.

Customer sales increased 24% to $2.15 billion from $1.73 billion a year earlier; Gaming revenue increased 32% from $1.26 billion to $1.66 billion; Embedded product sales rose to $1.26 billion from $54 million in the year-ago quarter before the company acquired Xilinx in February.

With the acquisition of Xilinx, AMD brought on board so-called Field Programmable Gate Arrays, or FPGAs, chips that can be configured by a customer or designer after they are manufactured. These chips are used as accelerators in data centers to increase computing power and improve energy efficiency in existing physical spaces.

Adjusted gross margins were 54% in the second quarter, up from 48% a year earlier and in the first quarter. Meanwhile, rival Intel reported gross margins of 44.8% for the second quarter and now expects 49% for the year, down from the 52% to 53% previously forecast by Intel Chief Financial Officer David Zinsner, or “comfortably over 50%.” , which were promised by CEO Pat Gelsinger.

Read: The pandemic PC boom is over, but its legacy will live on

Back in June, AMD said at its analyst day that it expects compound annual revenue growth of about 20% over the next three to four years.

Over the past 12 months, AMD stock is down 8%. The PHLX Semiconductor Index SOX,
-0.12%
is down 11%, the S&P 500 Index SPX,
-0.67%
is down 6% and the tech-heavy Nasdaq Composite Index COMP,
-0.16%
has fallen by 15%.

Elsewhere in the chip sector this earnings season, TXN by Texas Instruments Inc.,
-0.88%
Results and outlook beat Wall Street estimates at the time, while QCOM was owned by Qualcomm Inc.
-0.27%
The outlook fell short on flagging handset sales.

Chip Industry Supplier Lam Research Corp. LRCX,
-0.03%
topped Wall Street estimates for the quarter and forecast an outlook mostly above consensus, while rival KLA Corp. KLAC,
-0.76%
issued a forecast range that was partially below Wall Street estimates at the time. Previously ASML Holding NV ASML,
-2.17%
lowered its sales guidance for the year after the company said quick orders will delay revenue recognition for those sales into next year.

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