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Advanced Micro Devices, Inc. (NASDAQ: AMD ) this week issued a cautious outlook for the first quarter of 2023, after reporting stronger-than-expected fourth-quarter results. The chipmaker did not provide full-year guidance, citing macroeconomic uncertainty, but its shares posted strong gains after the announcement.
AMD has been in a downward spiral for some time, except for a few short-lived recoveries in between. The company’s market value has nearly halved since its peak more than a year ago. Investors seem to have taken Management’s warning about a short-term slowdown in stride, and responded positively to the earnings report.
Savings
Some experts are optimistic about the stock’s recovery prospects, citing the company’s resilience to a volatile demand environment and better financial performance than competitors. That, along with the low price, makes it a good investment opportunity worth considering.
Check out this space to read management/analyst comments on monthly reports
AMD’s adjusted earnings came in at $0.69 per share in the December quarter, down 25% from the year-ago period. The bottom line is above expectations, after missing in the previous quarter. Revenue rose sharply to $5.6 billion and exceeded expectations, as has been the case in almost every quarter in recent years.
Strong growth in the Data Center and Embedded segments – with contributions from the Xilinx business – more than offset weak profit performance by other divisions. The Client Division, which includes PC chips and laptops, remains under pressure due to a slowdown in demand. This trend is expected to continue in the current quarter.
Front Street
AMD executives warned of a 10% drop in revenue to about $5.3 billion in the current quarter, pointing to softening demand, particularly from the PC and server maker. Meanwhile, companies are betting on differentiated product portfolios to gain market share and generate strong long-term growth. Adjusted operating margin is approximately 50% in the first three months of 2023.
From AMD’s Q4 2022 earnings call:
“AMD now powers more than 100 of the world’s fastest supercomputers and 15 of the world’s 20 most energy-efficient supercomputers. To build on our data center leadership, we launched our fourth-generation EPYC processors last November that deliver up to twice as fast performance in cloud, enterprise, and HPC applications, and is up to 80% more energy efficient than the most recently announced competitive offerings. We’re seeing very strong customer traction for our fourth-generation EPYC CPUs, which complement our third-generation offerings with additional performance and capabilities.
Why investors should add Nvidia stock to their watchlist
Rival chipmaker Intel Corporation (NASDAQ: INTC ) last week disappointed stakeholders with dismal numbers, reflecting a slowdown in the electronics market. Intel earned a paltry 10 cents in the fourth quarter, on a per-share basis, as profit fell 32%.
Ahead of the post-earnings results, AMD stock traded up 12% on Wednesday afternoon. The stock has gained 31% so far this year.
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