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AMD shares are down 31% so far this year.
Dream time
Advanced Micro Devices announced better-than-expected earnings results on Tuesday afternoon. But the company forecast less revenue than expected for the September quarter, pushing the stock lower in after-hours trading.
AMD
(ticker: AMD) cited deteriorating demand in the overall PC market as a guideline.
For the second quarter, the semiconductor company reported adjusted earnings per share of $1.05, compared to Wall Street’s consensus estimate of $1.03, according to FactSet. Revenue came in at $6.6 billion, ahead of analyst expectations of $6.53 billion. But AMD offered a range for its current quarter revenue that comes in at $6.7 billion in the middle versus analysts’ estimate at $6.84 billion.
AMD shares initially fell as much as 5% in late trading after release.
There was good news. AMD’s server chip business is still thriving. Data center segment revenue in the second quarter grew 83% year-over-year in the June quarter.
Intel
(INTC), by comparison, last week reported a 16% year-over-year revenue decline for its data center server unit over the same period.
The company added that its next-generation server chip Genoa is on track to launch later this year and is positioned to gain more market share from Intel.
But the industry’s demand for computers is declining. Worldwide shipments of personal computers fell 15% in the June quarter from a year earlier, IDC reported last month. The research firm attributed the decline to “macroeconomic headwinds,” such as rising inflation and supply chain disruptions.
AMD has a similar view. During the conference call, the company’s management lowered its expectations for the overall PC market. It now expects the PC market to fall by a “mid-teens” rate this year from its previous estimate of a “high single digit” rate.
Some analysts believe AMD’s strong position in high-end server processors will help the company overcome the general weakness of PCs. Earlier this week, KeyBanc Capital Markets analyst John Vinh reiterated his Overweight rating for AMD. “We continue to see AMD benefit from strong demand for cloud data centers in the US,” he wrote.
AMD shares fell 31% this year from Tuesday’s close. For the same period the
iShares Semiconductor ETF
(SOXX), which tracks the performance of the ICE Semiconductor Index, is down 25%.
Write to Tae Kim at [email protected]
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