Advanced Micro Devices (AMD.US) Q2 results managed to beat Wall Street's forecast but it wasn't enough to make them a more willing buy today. The U.S. stock market is under pressure from yesterday's Fitch Ratings decision, fueling profit-taking. The company stressed that results were particularly positively impacted by higher sales of EPYC and Ryzen 7000 processors, and AMD CEO Lisa Liu pointed to a seven-fold higher commitment to AI development amid interest in AMD Instinct. Overall, however, AMD's report unsurprisingly confirmed a slowdown in the PC chip sector. The results confirm a sizable slowdown on a year-over-year basis. Also, k/k earnings per share declined slightly, with flat revenues. The sales forecast for the current third quarter came in below projections.
- Revenues: $5.35 billion vs. $6.55 billion in Q2 2022 (down 18% y/y) (Second quarter. y/y revenue decline in a row)
- Earnings per share: $0.58 vs. $1.05 in Q2 2022 (down 45% y/y) ($0.02 and $27 million GAAP)
- Gross margin: 50% vs 54% in Q2 2022 (down 4% y/y)
- Net income :$948 million vs. $1.7 billion in Q2 2022 (down 44%)
- Gaming revenue: $1.6 billion (4% decrease y/y)
- Revenue from Embedded: $1.5 billion (16% increase y/y)
- Data Center revenues: $1.13 billion (11% decrease y/y)
- Revenue from Client segment: $998 million (54% decrease y/y)
The market liked management's optimism around 'milestones' in the development of hardware and software dedicated to the AI sector for data centers. The company's commentary confirms that AMD is nobre on track to launch and ramp up production of AI MI300 products in Q4 of this year. In the current quarter, the company expects double-digit k/k revenue growth in its Data Center segment and Client segment offerings. The optimistic outlook is driven by demand for EPYC and Ryzen GPUs. These, however, are partially cushioned by a decline in demand in the gaming sector. For Q3, AMD estimates revenue of $5.7 billion versus $5.81 billion expectations. AMD's goal, according to CEO Liu, is to make AI a solid pro-growth factor - R&D spending In this area will increase.
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Open real account TRY DEMO Download mobile app Download mobile app- AMD highlighted the low demand of corproative customers and fairly high chip inventory levels in the cloud computing sector.
- At the same time, sales of the latest, 4th-generation EPYC proceosers nearly doubled k/k, and their sales to enterprises increased.
- Also, sales of AMD Ryzen 7000 processors increased significantly, and AMD expects the PC market to improve
- This was partially offset by a decline in sales of System-on-Chip (SoC) data center subsystems.
- The Embedded segment posted strong results thanks to strong market positions in the industrial, healthcare and automotive sectors.
- AMD unveiled new AMD Instinct solutions targeting software driving generative AI development and unveiled two new 4th generation EPYC processors to drive data center computing power.
AMD (AMD.US) shares are approaching key support at $112 per share where we see the 38.2 Fibonacci retracement of the upward wave from April. If the downward trend continues, a retest of $100 - the level of 61.8 Fibo and the psychological support zone - is not out of the question. Source: xStation5
