Advanced Micro Devices Inc. shares rose in the extended session Tuesday after the chip maker’s data-center sales gained and executives forecast sales of more than $5 billion to start 2023, even as cloud-customer demand begins the year light.
AMD shares
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rose 3% after hours, following a 3.7% gain in the regular session to close at $75.15.
AMD forecast revenue of $5 billion to $5.6 billion for the first quarter, with declines in client and gaming offset by gains in data-center and embedded sales, and a gross margin of 50%. While that did not blow away Wall Street’s expectations — analysts had estimated earnings of 68 cents a share on revenue of $5.5 billion for the first quarter, according to FactSet — it did quell some fears that cropped up after Intel Corp.’s
INTC,
disappointing results and forecast last week.
On the call with analysts, AMD Chief Executive Lisa Su called 2022 a “strong” year for the company, a stark contrast to the worst year for rival Intel since the dot-com bust. While PC inventory costs gutted Intel’s results, Su said AMD’s remaining inventory mostly lies in its data-center business, and that the second half of 2023 should be stronger for the segment than the first half.
While she was confident AMD would keep gaining market share from Intel, Su told analysts “there is some inventory at some of the cloud customers, and so we are expecting a softer first half and then a stronger second half.”
“But we feel very good about our market share position and opportunity to grow,” Su said on the earnings call.
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Participating in her first conference call as AMD’s chief financial officer, Jean Hu said data-center revenue is expected to decline due to that cloud-customer inventory, and that gross margins are expected to expand in the second half of 2023, after the last of the company’s PC inventory has worked its way through the system. Hu joined AMD from Marvell Technology Inc.
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on Jan. 23 to succeed the retiring Devinder Kumar.
“Going into second half, the normalization of client segment will help us to expand the gross margin,” Hu told analysts. “I think it really depends on how the client segment will recover,” adding that she felt “pretty good” that margins will expand once the client businesses is normalized.
Su said three months ago that AMD would “certainly exit the year in a better place,” after the company’s outlook, which had been below Wall Street estimates at the time, included the cost of clearing out inventory. There were doubts AMD would live up to her words following Intel’s dreary report.
Intel’s worse-than-feared quarterly report arrived as the PC industry deals with the worst shipment declines in recorded history. AMD, Intel and Nvidia Corp.
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had all poured new models of gaming cards into the holiday channel at a time when PC shipments were dropping at their steepest recorded rates and a wave of secondhand graphics-processing units, or GPUs, hit the market as unprofitable cryptocurrency-mining operations folded.
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AMD reported fourth-quarter net income of $21 million, or a penny a share, compared with $972 million, or 80 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were 69 cents a share, compared with 92 cents a share in the year-ago period.
Revenue rose to $5.6 billion from $4.83 billion in the year-ago quarter, with more than half of that coming from data-center and embedded sales. For the fourth quarter, AMD had forecast revenue of $5.2 billion to $5.8 billion, with its embedded and data-center segments “expected to grow,” with revenue of $23.2 billion to $23.8 billion for the year and gross margins of about 51%.
Analysts surveyed by FactSet had forecast 67 cents a share on revenue of $5.52 billion, with expected 2022 revenue of $23.52 billion.
Data-center sales rose 42% to $1.7 billion, while analysts expected $1.71 billion, the company reported, using its reclassified product groups.
Client — that is, PC — sales fell 51% to $903 million from a year ago, while the Street had estimated $965.8 million. Gaming sales fell 7% to $1.6 billion, while analysts were expecting $1.49 billion.
AMD shares were crushed with a 55% price decline in 2022, while the PHLX Semiconductor Index
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dropped 35.8%, the S&P 500 index
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finished the year down 19.4%, and the tech-heavy Nasdaq Composite Index
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shed 33.1%. Over January, however, markets have rallied, and AMD shares have surged 15%, while the SOX index gained 15%, the S&P 500 gained 6%, and the Nasdaq rose 10%.
Source: https://www.marketwatch.com/story/amd-stock-rises-on-better-than-feared-quarter-11675200452?siteid=yhoof2&yptr=yahoo