Advanced Micro Devices Inc (AMD) reported its quarterly Q4 results and beat Wall Street targets, causing a 3.5% increase in shares. The chip maker has been steadily gaining market share from rival Intel, particularly in the data center segment, where revenue grew 42% to $1.7 billion during the quarter. Despite the mixed demand environment, CEO Lisa Su expressed confidence in it’s ability to gain market share and deliver long-term growth with their differentiated product portfolio.
Data Center Market Gains
Advanced Micro Devices has been making gains in the data center market against Intel, who had nearly the entire server chip market in 2017 but had less than 80% of it in the first three quarters of last year while AMD exceeded 13%. This growth in the data center market has helped AMD remain resilient and overcome the challenges faced by the declining PC market.
Intel’s Gloomy Outlook
Despite AMD’s strong forecast, analysts warn that Intel’s struggles and any price cuts could still affect AMD. PC shipments fell 16.5% to 292.3 million units in 2022, leading to a decline in processor demand and a sell-off in chip stocks. AMD’s stock fell 55% last year, underperforming the Philadelphia SE Semiconductor index. However, AMD’s forecast was stronger than expected, considering Intel’s gloomy outlook for the PC market.
Decline in Client Segment
Revenue for Advanced Micro Devices client segment, including chips for PCs, dropped slightly over 50% YoY, but this was expected due to the sagging consumer electronics market. Advanced Micro Devices had already started under-shipping last year in response to plummeting processor demand as customers looked to clear their inventory stash before buying more chips.
Adjusted Revenue and Forecast
Adjusted fourth-quarter revenue rose 16% to $5.60 billion, surpassing the average analyst expectation of $5.50 billion. The company forecast current-quarter revenue of $5.3 billion, plus or minus $300 million, which is lower than the average analyst expectation of $5.48 billion.
Brief about AMD
Advanced Micro Devices, Inc. is an American multinational semiconductor company that designs and manufactures microprocessors, graphics processing units (GPUs), and other computer components. Founded in 1969, Advanced Micro Devices is based in Santa Clara, California and has operations worldwide. The company is a major competitor in the computer hardware industry and has gained market share in recent years, particularly in the data center market where it has been steadily chipping away at rival Intel’s share. It’s product portfolio includes CPUs, GPUs, and other computer components, with a focus on providing high-performance, energy-efficient solutions for a wide range of applications.
In conclusion, Advanced Micro Devices’s Q4 results show resilience in the face of challenges posed by the declining PC market. The company’s gains in the data center market have helped overcome these challenges and set a strong foundation for future growth. Despite the mixed demand environment, CEO Lisa Su is confident in It’s ability to gain market share and deliver long-term growth.