AMD Poised for Strong Quarterly Results Amid Market Challenges
Valued at $188.3 billion by market cap, Advanced Micro Devices, Inc. (AMD) has established itself as a leader in the semiconductor industry. Based in Santa Clara, California, this semiconductor giant focuses on creating products that enhance next-generation computing experiences. AMD operates through various segments, including Data Center, Client, Gaming, and Embedded.
Upcoming Earnings Announcement
AMD is scheduled to announce its fourth-quarter results on Tuesday, Feb. 4. Analysts are anticipating a non-GAAP profit of $0.88 per share, marking a 49.2% increase from the $0.59 per share reported in the same quarter last year. Notably, AMD has consistently surpassed Wall Street’s earnings expectations, achieving this feat in each of the past four quarters.
Anticipated Earnings Growth
For the full fiscal 2024, analysts forecast AMD will report an adjusted EPS of $2.54, representing a 27.6% increase from the $1.99 earned in fiscal 2023. Looking ahead to fiscal 2025, earnings are predicted to rise 63.4% year-over-year to $4.15 per share.
Stock Performance Over the Year
Over the past 52 weeks, AMD’s stock has declined by 21.9%, significantly lagging behind the Technology Select Sector SPDR Fund’s (XLK) 20% gains and the S&P 500 Index’s ($SPX) 21.8% returns during the same period.
Q3 Highlights and Challenges
AMD’s Q3 earnings and revenues displayed impressive growth, fueled by increased shipments of AMD Instinct™ GPUs and sales of AMD EPYC™ CPUs. The Data Center segment reported revenues soaring 122.1% year-over-year to a record $3.5 billion, while Client revenues increased by 29.5% to $1.9 billion. As a result, total net revenues grew by 17.6% to $6.8 billion, and non-GAAP net income rose 32.5% year-over-year to $1.5 billion. Despite this success, AMD’s stock fell by 10.6% on the trading session following its Q3 results released on Oct. 29, largely due to a revenue guidance for Q4 of $7.2 billion to $7.8 billion, which fell short of analyst expectations.
On a less positive note, the Gaming segment saw a sharp decline in revenues, falling 69.3% year-over-year to $462 million. Meanwhile, revenue from the Embedded segment dropped 25.4% to $927 million, affecting AMD’s overall sales growth. The company has experienced several downgrades and price target cuts from analysts as concerns about competition from industry leader NVIDIA Corporation (NVDA) mount.
Analyst Ratings and Future Expectations
Nonetheless, AMD holds a consensus “Strong Buy” rating. Among the 38 analysts covering the stock, 29 recommend a “Strong Buy,” one suggests a “Moderate Buy,” while eight advise holding the stock. The mean price target of $185.86 implies a potential increase of 60.2% from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here. More news from Barchart
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
