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Tag: Advanced Micro Devices Inc.

  • AMD misses but still ekes out 29% revenue growth

    AMD misses but still ekes out 29% revenue growth

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    AMD shares rose as much as 6% in extended trading on Tuesday after the chipmaker indicated its server chip business will grow in the quarters ahead, even as earnings and quarterly guidance failed to meet Wall Street’s expectations.

    Here’s how the company did:

    • Earnings: 67 cents per share, adjusted, vs. 68 cents per share as expected by analysts, according to Refinitiv.
    • Revenue: $5.57 billion, vs. $5.62 billion as expected by analysts, according to Refinitiv.

    Overall, AMD’s revenue grew by 29% year over year in the fiscal third quarter, which ended Sept. 24, according to a statement. Net income fell 93% to $66 million, mainly because of AMD’s $49 billion acquisition in February of Xilinx, a maker of chips called field-programmable gate arrays.

    On Oct. 6, AMD issued preliminary results for the fiscal third quarter that lagged guidance it provided in August, because of fewer chip shipments in a weaker PC market than expected. The stock fell almost 14%, its largest decline since March 2020. AMD has been preparing for the PC market to be lackluster in the fiscal fourth quarter, CEO Lisa Su said on a conference call with analysts.

    For the full year, AMD said it sees $23.5 billion in revenue, down from the $26.3 billion forecast the company gave in August. Analysts polled by Refinitiv had expected $23.88 billion. The company contracted its adjusted gross margin outlook to 52% from 54% in August.

    AMD said its Data Center segment generated $1.61 billion in revenue in the fiscal third quarter, up 45% and slightly below the StreetAccount consensus of $1.64 billion. The unit includes contributions from Xilinx and distributed computing startup Pensando, which AMD bought for $1.9 billion.

    The chipmaker has seen healthy demand for shipments of its server chips that carry the code name Genoa. AMD plans to launch Epyc data center chips on Nov. 10.

    “We’ve had very good progress at the North American cloud vendors and we continue to believe that although there may be some near-term, let’s call it optimization, of, let’s call it individual footprints and efficiencies at individual cloud vendors, over the medium term,” Su said. “As we go into 2023, we expect growth in that market, particularly customers moving more workloads to AMD, just given the strength of our product portfolio and overall general coming forward.”

    Su said cloud revenue more than doubled and increased sequentially, while revenue from server makers targeting big companies was down sequentially. She said AMD has seen enterprise customers taking longer to make decisions and being slightly more conservative on capital expenditures.

    The data center business “at least for now, looks decent, and quite a bit better than what’s going on with Intel,” said Stacy Rasgon, senior semiconductor analyst at Bernstein, in an interview on CNBC’s “Closing Bell: Overtime” after AMD announced its results. “There’s a lot of uncertainty about what they were going to say about data center, particularly in the wake of Intel’s report where Intel had called for the market to decline in Q4. This is probably why the stock is up now. The guide itself is quite weak, but it seems likely that it’s isolated to PCs.”

    The Gaming segment produced $1.63 billion in revenue. That was up about 14% and in line with the $1.63 billion consensus among analysts surveyed by StreetAccount. The company touted healthy demand for console chips for Microsoft and Sony as the holidays approach.

    The Embedded segment that includes some Xilinx sales delivered $1.3 billion, up from $79 million in the year-ago quarter and in line with the $1.3 billion StreetAccount consensus.

    AMD’s Client unit, which the chipmaker had warned about in October, generated $1.02 billion in revenue. That was down nearly 40% but in excess of the $1.17 billion StreetAccount consensus. Four days after AMD gave preliminary results, technology industry researcher Gartner said third-quarter PC shipments fell 19.5%, the steepest decline the company has seen since it started following the market in the mid-1990s. During the quarter AMD announced Ryzen 7000 desktop PC chips, and the company pointed to positive reviews of the products.

    AMD “worked closely with our customers to reduce downstream inventory,” Su said.

    All four of the segments delivered slightly more revenue than AMD had said to expect in its October warning.

    “We will continue to invest in our strategic priorities around the data center, embedded and commercial markets, while tightening expenses across the rest of the business,” Su said. The company will control operating expenses and headcount growth, said Devinder Kumar, AMD’s finance chief.

    Notwithstanding the after-hours fluctuation, AMD stock has plummeted 58% so far this year, while the S&P 500 is down 19% over the same period.

    WATCH: Bernstein’s Stacy Rasgon weighs in on AMD earnings

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  • Meta spending slams Facebook stock, but here are the chip stocks that are benefiting

    Meta spending slams Facebook stock, but here are the chip stocks that are benefiting

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    Data-center stocks buoyed an otherwise down chip sector Thursday as shares of Facebook parent Meta Platforms Inc. cratered on torn-in-half profits and a hike in capital spending to fuel Mark Zuckerberg’s metaverse ambitions, prompting one analyst to ask if server chips can only go up now.

    As shares of Meta dropped as much as 25% Thursday, shares of Nvidia Corp.
    NVDA,
    +2.31%
    surged as much as 7%, compared with less than 1% declines on the PHLX Semiconductor Index
    SOX,
    -1.51%
    and S&P 500 index
    SPX,
    -0.69%    .

    Late Wednesday, Meta reported that quarterly profits fell by more than 50% and added that it expects 2022 capital expenditure of $32 billion to $33 billion, compared with a previous range of $30 billion to $34 billion. In 2023, the company said, it expects capital expenditure in the range of $34 billion to $39 billion, “driven by our investments in data centers, servers, and network infrastructure.”

    Meta
    META,
    -24.64%
    noted that an “increase in AI capacity is driving substantially all of our capital expenditure growth in 2023.”

    Soon after Meta made that announcement, Jefferies analyst Mark Lipacis said in a note that “positive capex commentary from Alphabet
    GOOGL,
    -2.80%    ,
    Microsoft
    MSFT,
    -2.03%
    and Meta” was all a positive for data-center equipment providers Nvidia, Advanced Micro Devices Inc.
    AMD,
    -1.92%    ,
    Broadcom Inc.
    AVGO,
    -1.26%
    and Marvell Technology Inc.
    MRVL,
    +3.61%    .
    Lipacis has buy ratings on all four stocks.

    Shares of AMD rallied as much as 5%, Broadcom shares rose as much as 2% and Marvell shares surged as much as 10% Thursday. Intel Corp.
    INTC,
    -3.69%
    shares were up a little more than 1% at one point ahead of its earnings report, scheduled for after the close Thursday.

    Opinion: Facebook and Google grew into tech titans by ignoring Wall Street. Now it could lead to their downfall

    Jefferies noted that Meta’s capital expenditure for 2023 alone charts a 12% year-over-year hike at midpoint, compared with the Wall Street consensus of $29 billion, or a 5% year-over-year decline.

    “We sense investor caution around Nvidia’s datacenter business this quarter, but we expect all four [equipment providers] to discuss positive datacenter trends this earnings season,” Lipacis said, noting he was a buyer of Nvidia stock “in front of its earnings call.”

    From the perspective of the chip industry — which has gone from a two-year global chip shortage to a sudden glut in a matter of months as PC and consumer-electronics demand has dropped sharply, causing chip fabricators to pump the brakes on investments in new capacity — Lipacis questioned whether the glut will ever reach data-center sales, as many have feared.

    “The most common comment we hear from investors on Nvidia is ‘the Datacenter Shoe has to Drop,’” Lipacis said, noting that his data shows that the shoe has already dropped and an uptick is on the horizon.

    Lipacis explained that data-center sales from Nvidia, AMD and Intel combined declined to $10.5 billion in the second quarter from $12 billion in the fourth quarter of 2021 and that he is modeling another $10.5 billion quarter in the third.

    “This looks consistent with the pattern since 2017 of 4-to-5 qtrs above trendline, followed by 2-to-3 qtrs of below trendline ‘digestion,’ i.e., it looks like the datacenter shoe has already dropped,” Lipacis said.

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  • Apple Earnings Are on Deck as Consumer Demand Softens

    Apple Earnings Are on Deck as Consumer Demand Softens

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    Apple


    shares have been remarkably resilient in the face of this year’s tech stock selloff, falling less than 15% since the end of December, and sharply outperforming rivals


    Microsoft



    Alphabet


    and


    Amazon


    which are all down from 26% to 28%.

    Apple (ticker: AAPL) sits with a $2.4 trillion market valuation—$500 billion more than Microsoft, $1 trillion more than Alphabet, and nearly double the size of Amazon.

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  • Microsoft earnings are out – Here are the numbers

    Microsoft earnings are out – Here are the numbers

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    Microsoft CEO Satya Nadella gestures during a session at the World Economic Forum annual meeting in Davos on May 24, 2022.

    Fabrice Coffrini | AFP | Getty Images

    Microsoft reported earnings after the bell. Here are the results.

    • Earnings per share (EPS): $2.35 vs $2.30 expected, according to Refinitiv
    • Revenue: $50.12 billion, vs. $49.61 billion expected, according to Refinitiv

    Analysts have lowered their estimates in recent weeks because of a decline in PC unit shipments and the stronger U.S. dollar. They expect 9.5% revenue growth year over year, which would be the slowest growth since 2017. In July, Microsoft’s finance chief, Amy Hood, had told analysts to expect revenue growth to be 2% lower than it otherwise would be because of currency fluctuations.

    Technology industry researcher Gartner said earlier this month that PC shipments in the quarter fell 19.5% year over year, and chipmaker AMD earlier this month issued lower-than-expected preliminary quarterly results tied to a “weaker than expected PC market and significant inventory correction actions across the PC supply chain.” A slowing PC market could cause weakness in Microsoft’s revenue from the Windows operating system.

    Analysts expect Microsoft’s Azure cloud revenue to grow 36.4% on an annualized basis, compared with 40% growth in the previous quarter, according to a survey of 14 analysts conducted by CNBC. Analysts polled by StreetAccount expect 36.9% Azure growth.

    During the quarter, Microsoft started rolling out the first annual update to its Windows 11 operating system since releasing the original version last year, and the company announced plans to slow down its pace of hiring said it was cutting less than 1% of employees. Microsoft also introduced Viva Engage, a portal in the Teams communication app where co-workers can share video stories.

    The quarterly results will include small adjustments in the way that Microsoft reports revenue. Revenue from HoloLens augmented-reality devices will appear in the More Personal Computing segment instead of the Intelligent Cloud segment. Microsoft adjusted its forecast for the segments by about $100 million in connection with the change.

    Microsoft shares have fallen about 26% so far this year, while the S&P 500 stock index is down almost 20% over the same period.

    Executives will discuss the results and issue guidance on a conference call starting at 5:30 p.m. ET.

    This is breaking news. Please check back for updates.

    WATCH: Microsoft could rally hard with market, says NorthmanTrader’s Henrich

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  • These 11 stocks can lead your portfolio’s rebound after the S&P 500 ‘earnings recession’ and a market bottom next year

    These 11 stocks can lead your portfolio’s rebound after the S&P 500 ‘earnings recession’ and a market bottom next year

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    This may surprise you: Wall Street analysts expect earnings for the S&P 500 to increase 8% during 2023, despite all the buzz about a possible recession as the Federal Reserve tightens monetary policy to quell inflation.

    Ken Laudan, a portfolio manager at Kornitzer Capital Management in Mission, Kan., isn’t buying it. He expects an “earnings recession” for the S&P 500
    SPX,
    +2.78%
    — that is, a decline in profits of around 10%. But he also expects that decline to set up a bottom for the stock market.

    Laudan’s predictions for the S&P 500 ‘earnings recession’ and bottom

    Laudan, who manages the $83 million Buffalo Large Cap Fund
    BUFEX,
    -2.86%
    and co-manages the $905 million Buffalo Discovery Fund
    BUFTX,
    -2.82%    ,
    said during an interview: “It is not unusual to see a 20% hit [to earnings] in a modest recession. Margins have peaked.”

    The consensus among analysts polled by FactSet is for weighted aggregate earnings for the S&P 500 to total $238.23 a share in 2023, which would be an 8% increase from the current 2022 EPS estimate of $220.63.

    Laudan said his base case for 2023 is for earnings of about $195 to $200 a share and for that decline in earnings (about 9% to 12% from the current consensus estimate for 2022) to be “coupled with an economic recession of some sort.”

    He expects the Wall Street estimates to come down, and said that “once Street estimates get to $205 or $210, I think stocks will take off.”

    He went further, saying “things get really interesting at 3200 or 3300 on the S&P.” The S&P 500 closed at 3583.07 on Oct. 14, a decline of 24.8% for 2022, excluding dividends.

    Laudan said the Buffalo Large Cap Fund was about 7% in cash, as he was keeping some powder dry for stock purchases at lower prices, adding that he has been “fairly defensive” since October 2021 and was continuing to focus on “steady dividend-paying companies with strong balance sheets.”

    Leaders for the stock market’s recovery

    After the market hits bottom, Laudan expects a recovery for stocks to begin next year, as “valuations will discount and respond more quickly than the earnings will.”

    He expects “long-duration technology growth stocks” to lead the rally, because “they got hit first.” When asked if Nvidia Corp.
    NVDA,
    +6.14%
    and Advanced Micro Devices Inc.
    AMD,
    +3.69%
    were good examples, in light of the broad decline for semiconductor stocks and because both are held by the Buffalo Large Cap Fund, Laudan said: “They led us down and they will bounce first.”

    Laudan said his “largest tech holding” is ASML Holding N.V.
    ASML,
    +3.79%    ,
    which provides equipment and systems used to fabricate computer chips.

    Among the largest tech-oriented companies, the Buffalo Large Cap fund also holds shares of Apple Inc.
    AAPL,
    +3.09%    ,
    Microsoft Corp.
    MSFT,
    +3.88%    ,
    Amazon.com Inc.
    AMZN,
    +6.63%
    and Alphabet Inc.
    GOOG,
    +3.91%

    GOOGL,
    +3.73%    .

    Laudan also said he had been “overweight’ in UnitedHealth Group Inc.
    UNH,
    +1.77%    ,
    Danaher Corp.
    DHR,
    +2.64%
    and Linde PLC
    LIN,
    +2.25%
    recently and had taken advantage of the decline in Adobe Inc.’s
    ADBE,
    +2.32%
    price following the announcement of its $20 billion acquisition of Figma, by scooping up more shares.

    Summarizing the declines

    To illustrate what a brutal year it has been for semiconductor stocks, the iShares Semiconductor ETF
    SOXX,
    +2.12%    ,
    which tracks the PHLX Semiconductor Index
    SOX,
    +2.29%
    of 30 U.S.-listed chip makers and related equipment manufacturers, has dropped 44% this year. Then again, SOXX had risen 38% over the past three years and 81% for five years, underlining the importance of long-term thinking for stock investors, even during this terrible bear market for this particular tech space.

    Here’s a summary of changes in stock prices (again, excluding dividends) and forward price-to-forward-earnings valuations during 2022 through Oct. 14 for every stock mentioned in this article. The stocks are sorted alphabetically:

    Company

    		 Ticker

    		 2022 price change

    		 Forward P/E

    		 Forward P/E as of Dec. 31, 2021
    Apple Inc.

    		 AAPL,
    +3.09%         		-22%

    		 22.2

    		 30.2
    Adobe Inc.

    		 ADBE,
    +2.32%         		-49%

    		 19.4

    		 40.5
    Amazon.com Inc.

    		 AMZN,
    +6.63%         		-36%

    		 62.1

    		 64.9
    Advanced Micro Devices Inc.

    		 AMD,
    +3.69%         		-61%

    		 14.7

    		 43.1
    ASML Holding N.V. ADR

    		 ASML,
    +3.79%         		-52%

    		 22.7

    		 41.2
    Danaher Corp.

    		 DHR,
    +2.64%         		-23%

    		 24.3

    		 32.1
    Alphabet Inc. Class C

    		 GOOG,
    +3.91%         		-33%

    		 17.5

    		 25.3
    Linde PLC

    		 LIN,
    +2.25%         		-21%

    		 22.2

    		 29.6
    Microsoft Corp.

    		 MSFT,
    +3.88%         		-32%

    		 22.5

    		 34.0
    Nvidia Corp.

    		 NVDA,
    +6.14%         		-62%

    		 28.9

    		 58.0
    UnitedHealth Group Inc.

    		 UNH,
    +1.77%         		2%

    		 21.5

    		 23.2
    Source: FactSet

    You can click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.

    The forward P/E ratio for the S&P 500 declined to 16.9 as of the close on Oct. 14 from 24.5 at the end of 2021, while the forward P/E for SOXX declined to 13.2 from 27.1.

    Don’t miss: This is how high interest rates might rise, and what could scare the Federal Reserve into a policy pivot

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  • Facts changed and part of tech sank. We’re changing our view and trimming exposure

    Facts changed and part of tech sank. We’re changing our view and trimming exposure

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    As we think about what happened to this particular industry that once promised secular growth year after year, it has been two-fold.

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  • Dow books 630-point drop after strong jobs data rattles investors, but stocks cement weekly gains

    Dow books 630-point drop after strong jobs data rattles investors, but stocks cement weekly gains

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    U.S. stocks finished sharply lower Friday, but still booked their best weekly gains in a month, after September jobs data showed an unexpected fall in the unemployment rate that’s anticipated to reinforce the Federal Reserve’s resolve to keep tightening monetary policy.

    Investors also weighed a profit warning at a leading microchip maker ahead of next week’s increase in quarterly earnings results.

    What happened
    • The Dow Jones Industrial Average
      DJIA,
      -2.11%
      fell 630.15 points, or 2.1%, ending at 29,296.79, but off the session low of 29,142.66.

    • The S&P 500
      SPX,
      -2.80%
      dropped 104.86 points, or 2.8%, closing at 3,639.66.

    • The Nasdaq Composite
      COMP,
      -3.80%
      shed 420.91 points, or 3.8%, to finish at 10,652.40.

    Stocks posted back-to-back losses, trimming weekly gains, but recorded their best weekly gains since Sept. 9, according to Dow Jones Market Data.

    Read: Will the stock market be open on Columbus Day?

    What drove markets

    Stocks recorded sharp losses Friday after the Labor Department said the U.S. economy added 263,000 jobs in September, while the unemployment rate declined to 3.5% from an August reading of 3.7%. Average hourly earnings rose 0.3%.

    Still, a powerful rally earlier in the week boosted all three major stock indexes to weekly gains, a departure from three straight weekly losses, according to Dow Jones Market Data.

    “It’s manic. We are all on edge,” said Kent Engelke, chief economic strategist at Capitol Securities Management, of the sharp market swings.

    “Any piece of good news is a cause for an explosive rally,” Engelke said by phone. On the flip side, he pegged technology-based trading “in an illiquid and emotional market” as exacerbating Friday’s selloff.

    “It’s a reflection that people have re-entered the mind-set that the Fed is going to be raising rates at a rapid clip, probably for longer than what they might have suspected at the start of the week,” said Robert Pavlik, a senior portfolio manager at Dakota Wealth Management, by phone.

    Pavlik expects the Fed to keep tightening financial conditions to try to head off inflation. “But once we turn the corner, and the economy slows down, the Fed probably will be more aggressive in cutting rates on the way down.”

    In addition, the Fed has been “draining liquidity from the system at a remarkable pace,” wrote Rick Rieder, BlackRock’s chief investment officer of global fixed income, in a Friday client note, while pointing to an astounding $1.3 trillion decline in the central bank’s balance sheet since the December 2021 peak.

    Pavlik at Dakota Wealth said he anticipates the Fed will start slowing interest rate hikes by mid-next year, which likely means continued pressure for the stock market, particularly with a backdrop of big oil-price
    CL00,
    +5.37%
    gains this week after global crude producers voted to cut monthly production and with the U.S. dollar’s
    DXY,
    +0.44%
    surge this year against a basket of rival currencies.

    U.S. crude oil prices climbed for a fifth day in a row on Friday to settle at $92.64 a barrel, while booking at 16.5% weekly gain.

    New York Fed President John Williams said Friday that benchmark interest rates likely need to hit 4.5% over time. The Fed’s policy rate now sits in a 3%-3.25% range, up from a zero-0.25% range a year ago.

    The benchmark 10-year Treasury rate
    TMUBMUSD10Y,
    3.889%
    climbed to 3.883% Friday, as the key metric used to gauge the affordability of credit for businesses, household and the economy posted 10 straight weeks of gains, according to Dow Jones Market Data.

    Read: Bond markets facing historic losses grow anxious of Fed that ‘isn’t blinking yet’

    Investors continued to hope for relief on the inflation front and will be monitoring next week’s release of the September consumer-price index, as well as corporate earnings season as it picks up.

    Companies in focus
    • Twitter Inc.
      TWTR,
      -0.43%
      shares fell 0.4% Friday after a judge delayed a looming trial between the company and Elon Musk to allow the Tesla Inc.
      TSLA,
      -6.32%
      CEO more time to close his $44 billion acquisition of the social media platform.

    • Besides the jobs report, investors weighed a profit warning from microchip maker Advanced Micro Devices Inc. AMD, which said the PC market weakened significantly during the quarter. AMD shares fell 13.9%, and rivals including Nvidia Corp. NVDA and Intel Corp. INTC also closed lower.

    • U.S. cannabis stocks were choppy Friday, with the AdvisorShares Pure US Cannabis ETF
      MSOS,
      -2.80%
      ending lower, following steep gains earlier in the week after President Joe Biden said the U.S. would consider de-scheduling cannabis from its current position as a Schedule 1 narcotic under federal law.

    —Steven Goldstein contributed reporting to this article

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  • Here’s why good jobs news is bad news for the Fed and the stock market

    Here’s why good jobs news is bad news for the Fed and the stock market

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    The good-news-is-bad-news theme was an overarching reason behind Friday's sharp sell-off in stocks and the sharp increase in bond yields.

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  • The shaky stock market is barreling towards key tests with bank earnings, inflation data on deck

    The shaky stock market is barreling towards key tests with bank earnings, inflation data on deck

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  • AMD stock drops as $1 billion shortfall blamed on even weaker-than-expected PC sales

    AMD stock drops as $1 billion shortfall blamed on even weaker-than-expected PC sales

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    Advanced Micro Devices Inc. shares fell in the extended session Thursday after the chip maker cut its already conservative forecast because a drop in PC sales after two years of pandemic-driven sales appears worse than feared.

    AMD
    AMD,
    -0.13%
    shares fell as much as 4% after hours, following a 0.1% decline in the regular session to close at $67.85.

    Late Thursday, the company forecast third-quarter revenue of about $5.6 billion with adjusted gross margin of 50%.

    “The PC market weakened significantly in the quarter,” said Lisa Su, AMD’s chair and chief executive, in a statement. “While our product portfolio remains very strong, macroeconomic conditions drove lower-than-expected PC demand and a significant inventory correction across the PC supply chain.”

    AMD expects a 40% drop in client sales to about $1 billion, compared with Wall Street’s consensus estimate of $2.04 billion.

    In early August, AMD held firm on its revenue forecast of $26 billion to $26.6 billion for the year, and forecast third-quarter revenue of $6.5 billion to $6.9 billion, which at the time fell below the Wall Street consensus, and gross margins of 54%.

    Analysts polled by FactSet currently forecast third-quarter revenue of $6.71 billion, and annual sales of $26.13 billion. AMD is scheduled to report quarterly earnings on Nov. 1.

    “The gross-margin shortfall to expectations was primarily due to lower revenue driven by lower client processor unit shipments and average selling price,” AMD said. “In addition, the third-quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing and related reserves in the graphics and client businesses.”

    Last week, after Micron Technology Inc.
    MU,
    -0.20%
    reported an “unprecedented” oversupply problem, analysts debated whether this supply glut was worse than the one in 2019 that the industry has tried to avoid this time around, following two-years of COVID-19-related demand and supply-chain difficulties.

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