AMD topped Wall Street estimates for sales and profit when it released its fourth-quarter results on Tuesday (January 31, 2023), but it also gave analysts guidance for a 10% drop in year-over-year sales in the current quarter. The stock rose over 2% in extended trading. Here’s how the company did versus Refinitiv consensus estimates for the quarter ending in December:
- EPS: $0.69, adjusted, versus $0.67 per share expected
- Revenue: $5.6 billion, versus $5.5 billion expected
AMD said it expected $5.3 billion in sales in the current quarter, slightly lower than a Refinitiv estimate of $5.47 billion. AMD’s estimate suggests a 10% decline in sales in the current quarter. AMD’s sales rose 44% in 2022.
A crucial statistic for chipmakers, the business added that it anticipated its adjusted gross margin to be about 50%.
In its earnings report, AMD cited less consumer demand for completed devices and surpluses of components needed to build PCs and servers, while several of its rival chipmakers have struggled recently.
Intel, AMD’s primary competitor, reported a disastrous quarter last week that included a weak 2023 outlook including a 40% year-over-year decline in sales in the March quarter.
The chipmaker stated that its client revenue, or processors for PCs and laptops, and its gaming section were down. The chipmaker attributed its beat to significant growth in its embedded and data center businesses.
AMD’s data center segment rose 42% year-over-year to $1.7 billion. Its embedded segment grew 1,868%, AMD said, because of sales from its purchase of Xilinx.
While AMD said it saw slow sales for its PC chips and graphics processors, it said its data center segment rose 42% year-over-year, suggesting it took market share from Intel.
But its client group, which includes sales from PC processors, was down 51% year-over-year because of a slumping PC market, AMD said. It further stated that clients had an excessive amount of stock of its chips, an issue that other semiconductor firms have recently brought up. The global PC market is in a protracted slowdown, according to estimates.
AMD CEO Lisa Su told analysts that the company expects the total PC market to be down about 10% in 2023, and said the PC environment was “weak.”
“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,” Su said in a statement.
AMD’s gaming business, which is comprised of graphics cards and chips for gaming consoles, was down 7% year-over-year. The decrease came from graphics cards and was offset by “semi-custom” revenue, which how the company reports sales from chips for gaming systems like the PlayStation 5.
While data center and embedded sales are predicted to increase, AMD anticipates that PC chips and graphics processors will continue to experience declines in the current quarter.