AMD topped Wall Street estimates for sales and profit when it released its fourth-quarter results on Tuesday, but it also gave analysts guidance for a 10% drop in year-over-year sales in the current quarter. In extended trading, the stock gained more than 2%. Compared to the Wall Street consensus forecast of 67 cents for the fourth quarter, the semiconductor company’s adjusted earnings per share came in at 69 cents, according to FactSet. Analysts had predicted $5.51 billion in revenue, but the actual amount was $5.6 billion.
The business also said that it anticipated its adjusted gross margin, a crucial statistic for chipmakers, to be around 50%. In its earnings report, AMD cited weaker consumer demand for completed devices and surpluses of the components required to build PCs and servers, as well as recent financial struggles at several of its competitor chipmakers.
The data center division of AMD had a 42% year-over-year increase to $1.7 billion. Due to revenues from its acquisition of Xilinx, AMD said that its embedded business increased by 1,868%. While AMD reported poor sales of its PC chips and graphics processors, its increase in its data center business, indicated it was stealing market share from Intel.
Poor PC Sales Led to a Significant Decline in Revenue of Companies like Intel & AMD
However, AMD said that their clientele, which includes revenues from PC chips, was down 51% year over year as a result of a weak PC market. It also said that clients had an excessive amount of stock of its chips, an issue that other semiconductor firms have recently brought up. According to estimations, there has been a long slump in the worldwide PC market.
According to AMD CEO Lisa Su, there will be 260 million PCs sold worldwide this year, a 10% decline from last year’s total addressable market. (IDC forecast last month that 292.3 million PCs will be supplied in 2022; IDC and Gartner predicted a recovery as late as 2024.) AMD is anticipating “a softer first half and a stronger second half,” according to Su.
Su claims AMD has been “undershipping” its CPUs and GPUs into the market while it waits for demand to increase. Su states that while there are some reductions available as a result of “marketing programs and pricing incentives in place,” the firm has been concentrating on quickly balancing supply and demand. In Q1, she predicts, “We’ll undership to a lesser extent.”
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.”
-Lisa Su
The current PC collapse “marks the largest quarterly shipment decline since Gartner began tracking the PC market in the mid-1990s,” according to research company Gartner. Inflation, increasing interest rates, “the anticipation of a global recession,” and the fact that many individuals had already purchased a new PC during the epidemic, among other factors, were said to have slashed demand for new computers.
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