When Advanced Micro Devices ( AMD ) reports its quarterly earnings next week, Club ownership results should not look as bad as Intel’s ( INTC ) dismal numbers. AMD quarters can’t be perfect and may not be satisfactory in some areas. The semiconductor market – especially on the personal computer side where AMD and Intel operate – remains challenging overall. But the magnitude of Intel’s disappointment stems from many company-specific factors, including lost market share to chip peers such as AMD. It is an important difference that the stock movement there seems to reflect. Intel shares fell more than 7%, to less than $28 each. Meanwhile, AMD pared small losses early in the session to rise more than 1% to about $76 per share. What the Club thinks So sure, we are relatively cautious in AMD and believe that investors should wait before buying additional shares as reflected by our 2 rating. But that was before Intel’s worse-than-feared earnings were released after Thursday’s closing bell. Before we get more bullish, we want clarity on when AMD’s margins will no longer be squeezed by excess inventory. This multi-quarter, industry-wide issue will be evident in AMD’s fourth-quarter results scheduled to be released after the close Tuesday. The company’s forward guidance should provide an indication of when margin pressure will ease. At the same time, the big picture is clear. AMD has taken the upper hand in the competition against Intel. Under CEO Lisa Su, the chip designer has built a track record of consistent execution and developing technology that outperforms Intel. This makes AMD one of the leaders of the semiconductor industry’s recovery. Stock performance AMD INTC 5Y mountain Advanced Micro Devices (AMD) vs. Intel (INTC) over the past 5 years. a cascade of critical Wall Street research notes. “We have written the words ‘The worst earnings report in our history covers this company’ on more than one occasion over the last few years. But this time we REALLY mean it,” wrote Stacy Rasgon, noted semiconductor analyst at Bernstein. In the three months ended Dec. 31, Intel earned 10 cents per adjusted share, compared with EPS estimates of 20 cents, according to Refinitiv. Revenue fell 32% year over year to $14.04 billion, missing expectations of $14.45 billion. The company’s first-quarter forecast was worse than analysts thought. Intel guided or adjusted loss of 15 cents per share in the first quarter, while analysts expected earnings of 24 cents, according to Refinitiv. The chip maker’s first-quarter sales estimate was between $10.5 billion and $11.5 billion, far short of the consensus estimate of $13.93 billion. “While we are bracing for weaker numbers, and have hit estimates in the preview, the magnitude of the weaker guidance is quite surprising to us and the investors we talk to,” analysts at Morgan Stanley wrote in a note to clients. Many analysts are also concerned about the sustainability of Intel’s dividend at current levels given the amount of cash flow the company is burning. In 2022, Intel pays $6 billion in dividends to shareholders. In the post-earnings call on Friday, Intel’s chief financial officer, David Zinsner, said the company is “committed to maintaining a competitive dividend. AMD does not pay dividends. The implication for AMD is that Morgan Stanley believes that Intel’s results are “careful” for peers. especially AMD. “To some degree, we think that Intel’s inventory position is higher in customers than peers, and shows the loss in the server factor for them. But this clearly shows a weaker situation than expected, “said the analysts. “We remain enthusiastic for this year for AMD, and we like the stock in the long term -but no one knows that this is a cause for concern. report to them.” Bank of America sees Intel’s results as “only incrementally negative” for AMD, in part because analysts believe AMD’s inventory correction in the second half of the year was greater than Intel’s. This led analysts to lower AMD’s expectations. First quarter PC sales already, reducing the risk of disappointment in the main guidance like Intel. Analysts at the investment bank Cowen said that Intel will continue to lose market share to AMD in the main part of the data center and server chip market. AMD’s multiyear push to that lucrative market is central to the Club’s investment case. “As Intel itself proves to [over a decade]unseating a well-executing incumbent is difficult,” the analyst wrote. (Jim Cramer’s Charitable Trust is long AMD. See here for a full list of stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive trade alerts before Jim makes a trade. Jim waits 45 minutes after sending a trade signal before buying or selling shares in a charitable trust portfolio. If Jim has talked about stocks on CNBC TV, he waits 72 hours after issuing a trade signal before executing a trade. INVESTMENT CLUB INFORMATION ABOVE subject to TERMS AND CONDITIONS and PRIVACY policy, together with our disclaimer. No obligation or fiduciary obligation, or created, according to the terms of your personal information. INVESTMENT CLUB. No special results or profits are guaranteed.
Intel Foundry Services will manufacture multiple chips for MediaTek for a range of smart edge devices, the two companies said on Monday.
Fabian Bimmer Reuters
when Advanced Micro Devices (AMD) reports quarterly earnings next week, Club’s ownership results should not look like those of its longtime rivals. Intel‘s (INTC) number is gloomy.