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AMD’s AI revenue outlook gets a boost — but apparently not enough, as stock falls

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Shares of Advanced Micro Devices Inc. have enjoyed a monster 80% rally since the company’s last earnings report, but they were dipping in Tuesday’s extended session after the company came up shy with its latest outlook.

AMD
AMD,
-3.24%

forecasts first-quarter revenue of $5.4 billion at the midpoint, while analysts tracked by FactSet had been projecting $5.7 billion. The company expects flat data-center revenue on a sequential basis, “with a seasonal decline in server sales offset by a strong data-center GPU ramp,” referring to graphics processing units.

Additionally, AMD is calling for sequential revenue declines in its client, embedded and gaming businesses, noting that semi-custom revenue could fall by “a significant double-digit percentage.”

AMD’s forecast comes after Intel Corp.
INTC,
-2.10%

whiffed with its first-quarter outlook last week, delivering a revenue forecast that was at least $1 billion below the FactSet consensus view. After that, some analysts expected to see weakness in AMD’s own guidance.

Shares of AMD were down about 2% in choppy after-hours action Tuesday.

Read: Intel’s stock sees worst plunge in more than three years upon ‘yet another major reset’

For the fourth quarter, AMD generated net income of $667 million, or 41 cents cents a share, compared with $21 million, or 1 cent a share, in the year-before period.

On an adjusted basis, AMD earned 77 cents a share, up from the 69 cents a share it reported a year back. That matched the consensus view.

Revenue increased to $6.2 billion from $5.6 billion, whereas the FactSet consensus was for $6.1 billion.

AMD’s data-center business grew 38% from a year earlier to $2.3 billion, in line with the consensus view. Client revenue increased as well, coming in at $1.5 billion, up 62% from a year ago. That also matched consensus expectations.

The company saw a decline in its gaming revenue, which fell 17% to $1.4 billion but beating the consensus view, which was for $1.2 billion. Embedded revenue was down 24% to $1.1 billion, matching expectations held by analysts.

See also: Missed the boat on AMD’s stock surge? Why this analyst says you’re not too late.

Key on AMD’s earnings call will be commentary about the company’s MI300 accelerator for artificial-intelligence applications. HSBC analyst Frank Lee said ahead of the report that the recent rally in AMD shares “has raised expectations significantly, especially for AI MI300 GPU revenue potential.”

UBS’s Timothy Arcuri, meanwhile, sounded more upbeat.

“The tactical setup around earnings is complicated somewhat by the recent rally, but we are nonetheless more confident on AMD’s data-center GPU revenue opportunity,” he wrote, noting that he was “significantly” upping his full-year expectations for 2024 and 2025.



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