AMD Q2 earnings report - what Wall Street expect from semiconductor giant? 🔌

Advanced Micro Devices (AMD.US) is positioned as a rival to both Intel (INTC.PL) processors and potentially one of the beneficiaries of higher demand for high-performance AI chips. While AMD's AI offerings are not competitive with the dominant Nvidia, they are broader than Intel's. Investors may be particularly positively surprised by AMD's possible increase in market share despite Intel's strong performance. The stock has risen about 75% since the beginning of the year, well above the average of the semiconductor sector benchmark. The company will present its Q2 report after today's Wall Street session. What do analysts surveyed by FactSet expect?

• Revenue: $5.32 bln vs. $5.35 bln  in Q1 (AMD forecast: $5 to $5.6 billion) and $6,55 bln in Q2 2022
• Earnings per share (EPS): $0.57 vs. $0.6 in Q1 and $1,05 in Q2 2022 
• Data center: USD 1.4 billion
• Gaming: $1.62 billion
• Operating margin: 19.5%
• Q3 revenue forecast: $5.84 billion on $23.11 billion for full-year 2023 

Intel's weakness so far has foreshadowed AMD's higher processor market share, but Intel's rather strong quarter may indicate that AMD's growth catalyst is not coming from this side. Intel's PC chip sales rose 18% y-o-y which, given the overall slowdown in the PC market, may, in the worst-case scenario for AMD, indicate the first market share decline in a long time in favor of Intel. Intel's data center and PC chip revenues beat expectations - the usually faster-gaining AMD may face a similar scenario. However, this may not be enough to continue the giant's stock rally. The data center chip business may be waiting for a slowdown as enterprise customers are spending more and more on graphics chips supplied mainly by Nvidia - this would also be confirmed by Intel's lower Q3 guidance for the segment. The main driver for AMD seems to be the development of AI offerings and a possible rebound in demand in the PC sector. The market is counting on the oversupply of chips to end between Q3 and Q4 of this year - positive guidance from the company could reinforce bullish senntiment for chip stocks

What do analysts see?

• BofA analysts agree that Intel's strong PC sector performance poses a risk to AMD, although Intel's positive report in the AI segment could also mean positive guidance for Nvidia and the development of AMD's AI offering
• Susquehanna analysts expect results moderately in line with expectations but see risks on the side of a potentially weaker second half of the year
• Mizuho's analysis indicates that AMD may, like Intel, benefit from better-than-forecast PC sales, which may have been encouraged by fairly attractive PC prices in Q2.
• Stifel analysts highlighted a catalyst in the form of AMD MI300 series processors and graphics cards for data centers - their sales and forecast could possibly offset the report's weakness

The overall picture of AMD's report remains mixed - Intel's report confirmed that capital is highly interested in high-performance AI GPUs, and strong PC sales results may herald stagnation for AMD market share in terms of CPU market share with uncertain global PC demand in the second half of the year.

AMD stock (AMD.US), H4 interval. The price is in a narrow range - hugging two important Fiboancci levels of 23.6 and 38.2 Fibonacci retracement. The main support is marked by the SMA200 average, which was not tested in May. A positive surprise in the results could take the price to the area of the 23.6 Fibonacci retracement of the upward wave from early May, above $120 per share which would open the way to local peaks at $130. A negative surprise would almost certainly involve a drop below the 38.2 Fibo retracement, which would open the way to a test of the SMA200. Source: xStation5