AMD falls sharply amid disappointing earnings report

The AMD stock price was down nearly 10% today, falling to six week lows as market participants sold the company following discouraging earnings.

Earnings disappoint

Quarterly earnings of $0.60 per share for Advanced Micro Devices (AMD) were higher than the consensus estimate of $0.56. However, this is lower than the $1.13 per share profit made the previous year. These numbers have been accounted for one-time costs. The company’s earnings per share (EPS) have been above analyst forecasts three times in the previous four quarters.

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For the quarter ending in March 2023, AMD reported sales of $5.35 billion, which was 0.91% above the analysts’ estimates. Sales were $5.89 billion a year earlier, so this is an increase. In addition, over the past four quarters, the company’s revenue has met or exceeded expectations three times.

Different AMD divisions had wildly varying levels of success. Revenue from embedded chips increased by 163% year over year, while operating income increased by nearly three times as much. Still, significant declines in the client segment and flat sales in the data center segment weighed on overall performance. In addition, even minimal decreases in the gaming industry contributed negatively.

“We executed very well in the first quarter as we delivered better than expected revenue and earnings in a mixed demand environment,” AMD CEO Dr. Lisa Su said in a statement.

Meanwhile, CFO Jean Hu expressed optimism that the Data Center and Client segments would grow in the second half, offsetting “modest declines” in the Gaming and Embedded businesses.

Grim outlook

In the following days, observing if projections for the next several quarters and the current fiscal year shift will be intriguing. For the upcoming quarter, earnings per share are predicted to be $0.61 on revenues of $5.47 billion, and for the full fiscal year, EPS is projected to be $2.98 on revenues of $23.41 billion.

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AMD has seen a dramatic decline in PC sales. Gartner reports that first-quarter global shipments fell 30% year on year to 55.2 million devices. Fewer computers are moving off store shelves due to weak demand from consumers and businesses and abundantly available stock. As a result, client revenue, including PC processor sales, has dropped by 64% year over year, contributing to the PC market’s worst performance in years.

The next target for bears is at the 200-day moving average at $79 (the green line), followed by the uptrend line from October lows at around $74.