The future in semiconductor manufacturing, or better"a pigeon on the roof than a sparrow in the hand."
AMD (AMD.US) shares rose as much as 6% on Tuesday after the chipmaker indicated that its server chip business will grow in the coming quarters, even if results and quarterly forecasts fell short of Wall Street expectations.
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Open account Try demo Download mobile app Download mobile appThe company's results are as follows:
- Earnings per share (EPS): 67 cents per share vs. 68 cents per share as expected by analysts, according to Refinitiv.
- Revenue: $5.57 billion, versus $5.62 billion expected by analysts, according to Refinitiv.
AMD's revenue rose 29% year-on-year in its fiscal third quarter, which ended Sept. 24. Net income fell 93% to $66 million, mainly due to AMD's $49 billion acquisition of Xilinx, a maker of chips called field-programmable gate arrays, in February.
On October 6, AMD released preliminary results for its fiscal third quarter, which fell short of forecasts made in August, due to lower-than-expected chip shipments in a weaker PC market. Shares fell nearly 14%, the biggest drop since March 2020. AMD had been preparing for the PC market to be weaker in the fiscal fourth quarter. In terms of full-year results, AMD forecast $23.5 billion in revenue, a downward revision from the $26.3 billion it projected in August. The company also lowered its adjusted gross margin forecast to 52% from the 54% projected in August.
AMD said its Data Center segment generated revenue of $1.61 billion in the third quarter, up 45% and slightly below StreetAccount's consensus of $1.64 billion. The unit includes contributions from Xilinx and startup Pensando, which AMD bought for $1.9 billion.
The chipmaker also reported satisfactory demand for shipments of its server chips, which carry the code name Genoa. AMD plans to launch Epyc chips for data centers on November 10. The Gaming segment brought in $1.63 billion in revenue, up 14% and in line with the consensus of $1.63 billion reported by analysts surveyed by StreetAccount. With Christmas approaching, the company is seeing high demand for chips for Microsoft and Sony consoles.
The Embedded segment, which includes a portion of Xilinx's sales, brought in $1.3 billion, up from $79 million in the previous quarter and in line with StreetAccount's consensus of $1.3 billion.
AMD's client unit, which the vendor warned about in October, generated $1.02 billion in revenue. This was a drop of almost 40%, but exceeded StreetAccount's consensus of $1.17 billion. Four days after AMD reported its preliminary results, technology industry research firm Gartner reported that PC sales fell 19.5% in the third quarter, the largest decline the company has seen since it began tracking the market in the mid-1990s.
All in all, all four business segments generated revenue at a higher level than AMD announced in its October statement making very conservative statements about the results. It seems that in this particular case, the key to generating optimism among investors was not so much "proving" higher results than everyone expected, but higher than the company itself had previously assertively reported.
AMD.US stock chart, D1 interval
Source: xStation
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