AMD income beats targets, Wall St relieved after Intel’s grim outlook

By Chavi Mehta and Jane Lanhee Lee

(Reuters) -U.S. chip maker Superior Micro Gadgets Inc on Tuesday posted income that beat Wall Avenue targets and stated it anticipated enterprise to enhance within the second half, enthusing traders who noticed the corporate gaining on rival Intel.

Shares rose about 1.5% in after hours buying and selling. Though AMD’s forecast was behind expectations, it was not as weak as some frightened. Current earnings studies for each Intel and AMD present the as soon as quick rising knowledge heart enterprise can be tougher for all chip makers as corporations modify their spending.

“AMD remained resilient and even made positive factors of their datacenter chips…towards Intel,” stated Wayne Lam analyst at CCS Perception.

Chief Govt Lisa Su stated she was assured AMD will maintain gaining market share this 12 months and that the second half could be stronger than the primary.

Whereas Intel Corp. nonetheless dominates the PC and server processing chip markets with a share exceeding 70%, that’s down from greater than 90% in 2017, in line with tech analysis agency IDC. A giant chunk of that share was taken by AMD.

AMD’s Information Heart phase income grew 42% to $1.7 billion through the fourth quarter, offsetting a 51% drop in income of the consumer phase that features PCs at $903 million.

PC shipments fell 16.5% to 292.3 million items in 2022, in line with knowledge from analysis agency IDC.

Su stated that AMD was anticipating the PC market this 12 months to be down 10% and it might “proceed to ship under consumption within the first quarter to scale back downstream stock”.

“First quarter must be the underside for us in PCs after which develop from there into the second quarter after which into the second half,” Su stated on the earnings name.

The slumping PC enterprise pummeled Intel’s first-quarter outlook and Intel Chief Govt Pat Gelsinger stated he was seeing “among the largest stock corrections actually that we have ever seen within the business.”

“I feel we are going to nonetheless see ache throughout the business for a minimum of one other few quarters earlier than issues flip round,” stated Anshel Sag, analyst at Moor Insights & Technique.

“We imagine AMD’s outcomes proceed to point out softness throughout the PC and gaming markets,” stated Angelo Zino, analyst at CFRA Analysis. “We additionally count on income ranges in each segments to trough within the first half of this 12 months.”

AMD had already began under-shipping final 12 months in response to plummeting processor demand.

This decline led chipmakers to slash income forecasts, triggering a sell-off in chip shares. AMD’s inventory fell 55% final 12 months, underperforming the Philadelphia SE Semiconductor index throughout an business downturn

Adjusted fourth-quarter income rose 16% to $5.60 billion. Analysts on common have been anticipating income of $5.50 billion, in line with Refinitiv knowledge.

The corporate forecast current-quarter income of $5.3 billion, plus or minus $300 million. Analysts on common anticipated income of $5.48 billion, in line with Refinitiv knowledge.

(Reporting by Chavi Mehta in Bengaluru Jane Lanhee Lee in Oakland, Calif; Enhancing by Anil D’Silva, Jonathan Oatis and David Gregorio)