Q3 Earnings Wrap-Up: AMD and Apple Break Records Amid Market Challenges
The Q3 earnings season is nearing its conclusion, with only a few S&P 500 companies left to announce their quarterly results. This week, the retail sector will take center stage.
Stay updated with all quarterly releases: See Zacks Earnings Calendar.
Several notable companies, such as Advanced Micro Devices (AMD) and Apple (AAPL), reported record-breaking performances during this earnings period. Let’s explore their latest results.
AMD Reports Unprecedented Data Center Sales
Advanced Micro Devices showed impressive growth in its latest report. The company’s earnings per share (EPS) jumped 31% due to a 17% increase in sales. Margin improvements contributed to higher profitability, with a gross margin of 54%, significantly above last year’s 47%.
It’s important to note that the margins illustrated below reflect a trailing twelve-month basis.
Image Source: Zacks Investment Research
AMD is on course for record annual revenue in 2024, primarily due to substantial growth in its Data Center and Client segments. Data Center sales reached an impressive $3.5 billion, marking a record quarter and a remarkable 122% increase from the same period last year.
The company’s Data Center results have consistently surpassed analysts’ expectations in recent quarters, as illustrated below.
Image Source: Zacks Investment Research
Despite these strong Data Center results, shares of AMD did not respond positively post-earnings. Analysts revised earnings expectations downward, influenced by weaker-than-expected sales projections that have contributed to a negative sentiment around the stock over recent months.
Apple Achieves Record Sales Figures
Apple also reported strong numbers in its latest earnings release. The company enjoyed a 12% year-over-year increase in EPS alongside a 6% rise in sales, surpassing both consensus estimates. Initially, Apple shares did not react strongly, but they have since rebounded, gaining nearly 20% throughout 2024.
Driving much of this success, iPhone sales propelled record September-quarter sales to $69.9 billion, with Services revenue reaching an all-time high. The chart below highlights Apple’s consistent positive surprises against its consensus iPhone expectations.
Image Source: Zacks Investment Research
Nonetheless, Apple has faced headwinds from declining sales in China, a reality investors have noticed over the past year. Encouragingly, recent results indicated that sales in China remained steady at $15 billion year-over-year.
While a return to growth in China is desired, the recent figures suggest improving conditions. As depicted in the chart below, Apple has typically struggled to meet consensus expectations in China during recent quarters.
Image Source: Zacks Investment Research
Conclusion
This earnings season has been remarkable for some companies, including Apple AAPL and Advanced Micro Devices AMD.
Both companies showed generally positive results, although analysts had anticipated a stronger sales forecast from AMD amidst the current AI movement. Nonetheless, AMD continues to thrive, particularly in its Data Center segment, showcasing record sales in Q3. Despite not benefiting as much as some other AI-focused stocks, it remains an attractive option for investors interested in this sector.
On the other hand, while Apple’s results started off on a weaker note, shares have recovered since. The impact of slowing sales in China has affected the company’s performance, though strong Services results have been encouraging. With rising iPhone sales momentum, Apple stands out as a compelling choice for investors seeking technology exposure with solid fundamentals.
Only $1 to See All Zacks’ Buys and Sells
We’re not kidding.
Years ago, we surprised our members by offering 30-day access to all our stock picks for just $1—with no obligation to spend more.
Thousands have taken advantage of this deal, while many others hesitated, thinking there must be a catch. We want you to discover our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, which achieved 228 positions with double- and triple-digit gains in 2023 alone.
Want the latest recommendations from Zacks Investment Research? You can download 5 Stocks Set to Double today. Click to receive this free report:
Apple Inc. (AAPL): Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
