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Advanced Microdevices, Inc. (NASDAQ:AMD) shares are trading 14% lower since Wednesday’s open to $142.44 after the company reported third-quarter results. The company posted revenue of $6.8 billion, surpassing analyst expectations of $6.71 billion. Earnings per share met expectations of 92 cents.
What you need to know: AMD’s data center segment drove the company’s growth, growing 122% to $3.5 billion. The company also saw a 29% increase in customer segment revenue, totaling $1.9 billion.
However, gaming revenue saw a sharp decline of 69% to $462 million, and embedded revenue fell 25% to $927 million, although embedded revenue saw a sequential quarterly increase of 8%.
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CEO Lisa Su attributed AMD’s results to strong demand for the company’s EPYC and Instinct data center products, as well as Ryzen processors in the PC segment. She also predicted further growth opportunities in the data center, customer and embedded enterprise sectors, driven by escalating demand for computing power.
Looking ahead, AMD forecasts fourth-quarter revenue of $7.5 billion, up 22% year-over-year at the midpoint. Adjusted gross margins for the fourth quarter are expected to remain consistent at 54%.
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Comments from analysts: The company’s expansion into artificial intelligence (AI) and data center solutions has drawn positive responses from analysts, who suggest that AMD could increasingly challenge its main competitor, NVIDIA, in the AI domain.
KeyBanc analyst Johannes Vinh noted the importance of AMD’s MI300 chip, which is expected to generate $5 billion in revenue by 2024.
Vinh believes this chip could broaden customer adoption in cloud and AI applications, despite conservative expectations for the fourth quarter.
Cantor Fitzgerald analyst CJ Muse pointed out that AMD’s AI advances with the MI300 could eventually generate $12 billion in revenue, which would support potential earnings growth by 2025 or 2026, even as he expects a near-term trading hiatus for AMD stock.
Other analysts gave mixed reviews. Rick Schafer of Oppenheimer praised AMD’s rapid creation of a competitive AI franchise, which is expected to exceed $5 billion in annual revenue, although he suggested that investor expectations may be too ambitious.
In the meantime, Piper Sandler’s tough Kumar highlighted strong GPU execution but acknowledged challenging guidance, noting that while AMD’s GPU and server segments are promising, gaming and embedded segments pose risks.
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This Article AMD Stock Gets Hammered This Week: What’s Going On? originally appeared on Benzinga.com
