AMD stock rises on better-than-feared quarter

AMD forecast revenue of $5 billion to $5.6 billion for the first quarter, with declines in client and gaming offset by data-center and embedded sales, and a gross margin of 50%.

“Although the demand environment is mixed, we are confident in our ability to gain market share in 2023 and deliver long-term growth based on our differentiated product portfolio,” said Lisa Su, AMD chair and chief executive, in a statement.

Analysts had estimated 68 cents a share on revenue of $5.5 billion for the first quarter, and $3.58 a share on revenue of $24.77 billion for the year.

The company 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. 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.

Three months ago, AMD Chief Executive Lisa Su said the company’s outlook, which had been below Wall Street estimates at the time, included the cost of clearing out inventory, and that the company would “certainly exit the year in a better place.”

That was before Intel Corp.’s
INTC,
+1.11%
worse-than-feared quarterly report that rounded out the worst year for the chip maker since the dot-com bust as the industry faces the worst PC shipment declines in recorded history. Inventory-clearing charges eroded gross margins at Intel, and the company expects a continued 400-basis-point headwind in the current quarter.

AMD, Intel and Nvidia Corp.
NVDA,
+1.96%
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. 

AMD shares were crushed with a 55% price decline in 2022, while the PHLX Semiconductor Index
SOX,
+1.93%
dropped 35.8%, the S&P 500 index 
SPX,
+1.46%
finished the year down 19.4%, and the tech-heavy Nasdaq Composite Index 
COMP,
+1.67%
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 Nasdaq rose 10%.