AMD stock soared on Wednesday after the chipmaker reported higher-than-expected data center chip sales in the fourth quarter. but Advanced Micro Devices (AMD) tempered that news with softer guidance for the current period.
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The Santa Clara, California-based company said late Tuesday that it earned 69 cents per share on adjusted sales of $5.6 billion in the December quarter. Analysts polled by FactSet were expecting AMD earnings of 67 cents per share on sales of $5.51 billion.
On a year-over-year basis, AMD earnings fell 25% while sales rose 16%. The Xilinx acquisition boosted revenue and helped offset declining PC and gaming chip sales.
In the fourth quarter, AMD’s PC chip sales fell 51% year over year to $903 million amid weak personal computer demand. Gaming segment revenue fell 7% to $1.6 billion.
Meanwhile, sales of data center chips powered by Epyc server processors rose 42% to $1.7 billion.
AMD stock rises after report
For the current quarter, AMD predicted sales of $5.3 billion, down 10% year over year. Analysts were looking for $5.5 billion in the first quarter.
In midday trading on the stock market today, AMD stock jumped 9% to 81.93. During Tuesday’s regular session, AMD stock climbed 3.7% to close at 75.15.
“While the demand environment remains mixed, we are confident in our ability to capture market share in 2023 and deliver long-term growth based on our differentiated product portfolio,” Chief Executive Lisa Su said in a news release.
Wall Street divided on the news
AMD’s fourth-quarter report offered something for the bulls as well as the bears. At least four Wall Street analysts raised their price targets on AMD stock while three lowered their targets.
AMD expects the PC market to go down in the first quarter. The company also sees cloud computing customers working to digest chip inventory in the first half of the year.
AMD hopes to counter headwinds in overall market by taking share from rival intel (INTC). But those efforts are likely to cut into the company’s profit margins, analysts say.
According to IBD Stock Checkup, AMD stock ranks No. 12 out of 34 stocks in IBD’s Fabless Semiconductor industry group. It has a so-so IBD overall rating of 72 out of 99. The composite rating scores a stock’s key growth metrics against all other stocks, regardless of industry group.
Follow Patrick Seitz on Twitter @IBD_PSeitz For more stories on consumer technology, software and semiconductor stocks.
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