AMD (AMD) announced its third-quarter financial results on Tuesday, with earnings per share meeting expectations and exceeding revenue. However, Wall Street was less enthusiastic about the company’s fourth-quarter revenue outlook, saying it would be between $7.2 billion and $7.8 billion. Wall Street was asking for $7.55 billion.
Immediately after the announcement, the company’s stock price fell more than 5% on concerns that the company’s artificial intelligence growth would slow. Nevertheless, CEO Lisa Su said demand for the company’s products is strong.
“Going forward, we see significant growth opportunities across our data center, client and embedded businesses due to the insatiable demand for more computing,” he said in a statement.
AMD had adjusted earnings per share of $0.92 and revenue of $6.8 billion for the quarter. Based on Bloomberg analyst consensus estimates, Wall Street had expected adjusted EPS of $0.92 and revenue of $6.7 billion. In the same period last year, the company had sales of $5.8 billion and EPS of $0.70 per share.
AMD’s most important data center business unit brought in $3.5 billion versus expected $3.46 billion, up from $1.59 billion in Q3 2023.
The company’s second-largest segment, its client business, which includes sales of CPUs for desktops and laptops, exceeded $1.9 billion versus expectations of $1.71 billion, up from $1.45 billion last year. However, AMD’s gaming division saw a 69% year-over-year decline in sales, with sales of $462 million compared to $1.5 billion in the same period last year.
The gaming division includes sales of AMD’s Radeon graphics cards for laptops and desktops and custom chips for consoles such as Xbox and PlayStation.
Sales of graphics cards for gaming PCs and consoles are down from their peak during the pandemic. The pandemic has had consumers buying up devices to fill their days and nights stuck at home and on the couch.
AMD’s earnings come after the company announced details of three upcoming chips, including the 5th generation AMD EPYC central processing unit (CPU) for servers, the Instinct MI325X AI chip, and the Ryzen AI Pro 300 for AI PCs for enterprise users. It was announced less than a month ago. .
The company’s stock price has risen 72% over the past 12 months, outpacing the broader S&P 500 index (GSPC), which is up 41%, and even outpacing struggling Intel (INTC), whose stock price is down a staggering 35%. . Meanwhile, Nvidia (NVDA) continues to grow rapidly, gaining an astonishing 246% in the last year.
AMD is Nvidia’s biggest rival in the AI chip space. Of course, this doesn’t mean much since Nvidia is estimated to have 75% to 90% of the market.
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