AMD Lowers Q1 Revenue Forecast Despite Doubling AI Processor Projections

Summary

  • AMD anticipates a revenue of around $5.4 billion, underneath analysts’ estimate of $5.73 billion, causing overshadowing of its AI processor revenue projections boost from $2 billion to $3.5 billion.
  • Shares of AMD witnessed a 6.6% drop to $160.77 in premarket trading on Wednesday, despite rising more than 137% over the past year.
  • The company’s price-to-earnings (PE) ratio stands at 43.87, the highest among leading U.S. chipmakers.
  • Other semiconductor companies such as Nvidia, Micron Technology, Qualcomm, Broadcom and Intel experienced a decrease between 0.5% and 2.5% in share value.
  • AMD’s data center segment, which includes server chips and AI processors, increased 38% in Q4 from last year, reaching $2.3 billion, however, demand from cloud computing firms stayed “soft”.

AMD’s Revenue Projection and Analyst Takes

While the first quarter revenue target for AMD stands at approximately $5.4 billion, a shortfall of about $300 million from the $5.73 billion analysts’ prediction has been observed. However, this is overlaid by a significant increase in its artificial intelligence (AI) processor revenue predictions, rising from $2 billion to $3.5 billion.

Analyst Stacy Rasgon from Bernstein pointed out that considering the recent height of expectations from AMD, a reset in these expectations might not be a negative development. However, she also mentioned that the exceedingly high expectations for data center GPUs might remain unattainable at least till 2024.

Stock Market Influence

AMD, based in Santa Clara, California, faced a 6.6% drop in shares to $160.77 during Wednesday’s premarket trading. However, the shares have witnessed over a 137% climb within the past year. In a parallel pattern, other chipmakers including Nvidia, Micron Technology, Qualcomm, Broadcom, and Intel, witnessed a downturn in their share values, ranging between 0.5% and 2.5%. Additionally, iShares Semiconductor ETF and VanEck Semiconductor ETF both plunged 1.9%.

AMD’s Performance in Data Center Segment

Despite a bleak first-quarter revenue outlook shared by Intel, AMD’s data center segment, inclusive of its traditional server chips and AI processors, escalated 38% in the fourth quarter compared to the previous year, reaching a value of $2.3 billion. Conversely, CEO Lisa Su stated a “soft” demand from cloud computing entities.

AMD’s price-to-earnings (PE) ratio is recorded at 43.87, the highest among major U.S. chipmakers, in comparison to Intel’s 29.78, Nvidia’s 30.18, Qualcomm’s 14.94, and Micron’s 34.33. Comparatively, a lower multiple is indicative of a more appealing investment opportunity.

Brokerages On AMD

At least five brokerages revised their price targets upwards for AMD, pushing its median price target to $190, suggesting a prospective 10.4% increase in share value over the upcoming 12 months. Analysts from TD Cowen acknowledged that AMD met all expectations and delivered effectively.

This trend in the semiconductor industry and the performance of firms like AMD can substantially influence forex trading, particularly impacting assets such as technology stocks and ETFs.

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