AMD Q3 Earnings: Stock Falls on Weak Q4 Outlook

WhatsApp Group Join Now
Telegram Group Join Now

Advanced Micro Devices (AMD) reported a big jump in Q3 2024 revenue, hitting $6.82 billion. This is a 22% increase from the $5.8 billion in the same period last year. But, the stock fell nearly 8% in after-hours trading.

The reason is AMD’s Q4 2024 revenue forecast. It’s expected to be between $7.4 billion and $7.8 billion, with a midpoint of $7.6 billion. This fell short of the expected $7.55 billion midpoint.

Key Takeaways:

  • AMD reported strong Q3 2024 revenue of $6.82 billion, a 22% year-over-year increase.
  • The company’s Q4 2024 revenue forecast of $7.4 billion to $7.8 billion disappointed investors, causing the stock to drop.
  • Data center revenue reached $3.5 billion, up 122% year-over-year, highlighting the segment’s strong performance.
  • AMD’s Client segment saw a 29% increase in revenue, while Gaming and Embedded segments experienced declines.
  • The company’s profitability improved, with GAAP net income nearly tripling and gross margin increasing to 50%.

AMD Q3 Earnings Snapshot: Revenue Beats, But Guidance Disappoints

Advanced Micro Devices (AMD) shared its third-quarter 2024 financial results. The company did better than expected on revenue, but its fourth-quarter forecast was a letdown. This news made the AMD stock drop by 7% in after-hours trading.

Key Q3 Financial Figures

In the third quarter, AMD saw a big jump in its GAAP net income to $771 million, or $0.47 per share. This is almost three times the $299 million, or $0.18 per share, from the same period last year. Adjusted earnings per share (EPS) hit $0.92, matching what analysts predicted.

But, AMD‘s revenue forecast for the fourth quarter of 2024 was less than expected. It’s set between $7.4 billion and $7.8 billion, with a midpoint of $7.6 billion. This missed the $7.55 billion midpoint that analysts were hoping for. It suggests a possible slowdown in growth and lowered investor expectations.

“AMD’s strong third-quarter performance was driven by solid execution across the business, with revenue, operating income, and EPS all exceeding our guidance,” said AMD Chair and CEO Dr. Lisa Su.

Despite mixed results, AMD‘s stock price stayed strong, rising by 3.96% during regular trading on the day of the earnings. But, the fourth-quarter guidance that fell short of expectations led to a 7% drop in after-hours trading.

  • AMD Q3 Revenue: Reported $23.28 billion in sales.
  • Q4 Revenue Outlook: Guidance for Q4 revenue was disappointing, leading to a stock price fall.
  • AMD Stock Performance: Shares fell as the Q4 outlook failed to impress investors.

Overall, AMD‘s third-quarter results showed the company’s financial strength. But, the fourth-quarter guidance that was weaker than expected cooled down the market’s excitement. This led to a drop in the stock price.

Data Center Segment Drives Growth, Led by AI and Cloud Demand

AMD’s data center segment, which includes its Instinct-branded GPUs, saw a big jump in Q3 2024. The segment’s revenue hit $3.5 billion, up 122% from the year before. This growth came from strong demand from cloud providers and companies wanting to boost their AI infrastructure.

The rise in the data center segment, driven by AI and cloud computing, played a big role in AMD’s success. The company’s data center chips are key for powering the growing need for AI and cloud computing. They are essential in today’s fast-changing tech world.

AI and Cloud Computing Fuel Data Center Momentum

The demand for data center chips has skyrocketed, thanks to AI and cloud computing’s rapid growth. More businesses and organizations are turning to cloud services and AI apps. This has led to a huge need for strong and efficient data center infrastructure.

AMD’s Instinct GPUs have made the company a top player in the AI semiconductor market. This has helped AMD tap into the growing demand for AI and cloud computing. The company’s ability to offer high-performance, energy-saving data center chips has been a big part of its success.

AMD’s strong data center segment shows how important data center chips are for digital transformation and AI/cloud computing. As these trends keep growing, AMD is set to keep its lead. The company is well-placed to take advantage of the fast-changing data center market.

Client and Gaming Segments Show Mixed Performance

AMD’s latest earnings report shows mixed results in its business segments. The Client segment, which covers desktop and notebook processors, saw a 29% revenue jump to $1.9 billion. On the other hand, the Gaming segment’s revenue plummeted 69% to $462 million.

The drop in Gaming sales was due to fewer semi-custom product sales. This includes a decrease in gaming console demand. It mirrors the pc market decline and pc sales slowdown affecting the gaming world.

Segment Q3 2023 Revenue Q3 2024 Revenue Year-over-Year Change
Client $1.47 billion $1.9 billion 29% increase
Gaming $1.5 billion $462 million 69% decrease

The mixed results in Client and Gaming segments highlight the pc market slowdown and gaming segment challenges. The Client segment showed resilience, but the Gaming segment’s decline points to industry-wide hurdles.

AMD’s CEO, Dr. Lisa Su, noted strong demand for AI infrastructure from cloud providers and enterprises. This is a key factor in AMD’s progress. It suggests focusing on data center and AI offerings could be vital for AMD to grow despite the pc market decline.

AMD Q3 earnings: Stock falls as Q4 outlook disappoints

AMD’s third-quarter earnings were strong, but the outlook for the fourth quarter was cautious. This cautious outlook made investors worry. The company’s stock fell over 7% in after-hours trading.

AMD’s Q3 2024 earnings report showed many positives. The company made $6.82 billion in revenue, a 22% increase from last year. Adjusted earnings per share (EPS) were $0.92, matching what analysts expected.

The data center segment was a highlight, with revenue up 122% to $3.5 billion. This growth was due to high demand for AMD’s products in AI and cloud computing.

But, AMD’s Q4 revenue outlook was disappointing. The company expects revenue between $7.2 billion and $7.8 billion, with a midpoint of $7.6 billion. This fell short of what investors were hoping for, causing the stock to drop.

Despite the stock’s reaction, AMD is optimistic about its future. The company believes in the growth of AI and data center markets. AMD expects to make about $5 billion in AI-related revenue for 2024, up from an earlier estimate of $4.5 billion.

Metric Q3 2024 Q3 2023 Change
Revenue $6.82 billion $5.8 billion +22% YoY
Adjusted EPS $0.92 N/A N/A
Data Center Segment Revenue $3.5 billion $1.59 billion +122% YoY
Client Segment Revenue $1.9 billion $1.45 billion +29% YoY
Gaming Segment Revenue $462 million $1.5 billion -69% YoY

The amd q3 earnings report showed AMD’s ability to grow despite tough market conditions. But, the stock market reaction to the Q4 guidance shows AMD needs to balance short-term and long-term goals. This is important, given the fast-changing AI and data center markets.

AMD stock price

Competitive Landscape: AMD Trails Nvidia in AI GPU Market

In the competitive AI GPU market, AMD is a major player but trails Nvidia. AMD’s data center segment, with its Instinct GPUs, is growing fast. This growth is driven by the need for more computing power in many fields. Yet, AMD faces a tough challenge against Nvidia’s strong position in the AI semiconductor market.

AMD’s Instinct GPUs Position Company in AI Race

AMD’s Instinct GPUs make the company a strong contender in the AI race. They show AMD’s plan to use its tech and know-how to get a bigger piece of the data center chips and AI semiconductor market. But, Nvidia is the top dog in the AI GPU market, leaving AMD behind in market share and leadership.

Even though AMD is making good progress in the data center area, its Instinct GPUs haven’t yet beaten Nvidia in top AI tasks. As the need for strong data center chips and AI semiconductors keeps growing, AMD must improve and fine-tune its Instinct products to compete with Nvidia’s leading solutions.

“AMD’s Instinct GPUs have positioned the company as a key player in the growing AI race, highlighting the company’s strategy to leverage the insatiable demand for more compute power across various sectors.”

Long-Term Growth Prospects Remain Positive

AMD is facing short-term hurdles but its future looks bright. Dr. Lisa Su, AMD’s CEO, believes the company is ready to seize new opportunities. This is as technology needs change.

The Gaming segment had a tough time, but AMD’s data center products are in high demand. The company is also ready to use new trends to its advantage. The data center, driven by AI and cloud computing, is a big reason for AMD’s recent success.

AMD is also keeping a close eye on the PC market, focusing on gaming. This is a big part of its long-term plan. The company needs to make the most of PC and gaming trends to keep growing.

AMD’s strong spot in the semiconductor world also helps its future. The company’s tech advancements and ability to innovate in different markets make it ready for the future.

“We are well-positioned to capture opportunities across the data center, client, and embedded businesses as technology demands continue to evolve.”

AMD data center growth

AMD is facing some short-term issues, but its long-term outlook is good. Its focus on data center, PC, and gaming markets, plus its strong position in the industry, show it’s ready to benefit from future trends. This will help AMD stay profitable over time.

Supply Chain Challenges and Inventory Levels

The semiconductor industry, including AMD, faces ongoing supply chain issues and inventory challenges. These problems affect the company’s operations and financial health.

Inventory Days Outstanding Metric Indicates Demand Constraints

AMD’s inventory days outstanding (DIO) was 144 in the latest quarter. This is 34 days above its five-year average. Despite a recent drop, AMD’s inventory is higher than usual. This shows demand and supply chain challenges in the PC market and semiconductor industry.

The semiconductor industry’s cyclical nature makes inventory levels key. They show the balance between supply and demand. This balance is vital for AMD’s profitability and growth. It affects the company’s ability to meet customer needs and manage inventory well.

Metric Q3 2024 5-Year Average
Inventory Days Outstanding (DIO) 144 days 110 days

AMD is dealing with supply chain and inventory issues. These problems might limit the company’s ability to meet growing demand for its products. This is true for chip demand and the PC market.

“The semiconductor industry is known for its cyclical nature, and the inventory levels can provide important insights into the balance between supply and demand.”

As AMD tackles supply chain constraints, it must improve inventory management. The company needs to address these supply chain challenges. This is to ensure it meets customer needs and stays competitive in the market.

Conclusion

AMD’s Q3 2024 earnings report showed both good and bad news. The company beat revenue expectations but warned about a tough Q4 2024. This led to a drop in its stock price.

The data center segment did well, thanks to AI and cloud computing demand. But, the Client and Gaming segments faced challenges in the PC and gaming markets.

Despite current issues, AMD looks good for the long run. It’s a major player in the semiconductor world. But, it must deal with supply chain problems and inventory issues to keep growing.

AMD’s market value is $269.07 billion USD. It trades about 33.67 million shares every 30 days. Its performance in the stock market is key to its future success.

As the semiconductor industry changes, AMD must stay flexible. It needs to take advantage of trends like AI and cloud computing. Its competition with Nvidia will also affect its growth.

FAQ

What were the key financial highlights from AMD’s Q3 2024 earnings report?

AMD’s Q3 2024 earnings showed a revenue of $6.82 billion, beating expectations. The company forecasted Q4 2024 revenue to be between $7.4 billion and $7.8 billion. This was less than what investors hoped for, causing AMD’s stock price to drop.

How did AMD’s data center segment perform in Q3 2024?

AMD’s data center segment saw a big jump in Q3 2024. It reached $3.5 billion in revenue, a 122% increase from the same period last year. This growth was driven by increased demand for AI infrastructure from cloud providers and enterprises.

What was the performance of AMD’s Client and Gaming segments?

AMD’s Client segment, which includes desktop and notebook processors, saw a 29% revenue increase. On the other hand, the Gaming segment experienced a 69% decline in revenue. This was mainly due to lower sales of gaming consoles.

How did AMD’s inventory levels and supply chain challenges impact the company’s performance?

AMD’s inventory days outstanding (DIO) was 144 this quarter, 34 days above its five-year average. This indicates higher inventory levels, suggesting possible demand constraints and supply chain issues.

How does AMD’s competitive position in the AI semiconductor market compare to Nvidia?

AMD is second to Nvidia in the AI graphics processing unit (GPU) market. AMD’s Instinct GPUs have made it a key player in the AI race. Yet, Nvidia leads in market share and AI semiconductor leadership.

What is AMD’s long-term growth outlook based on the Q3 2024 earnings report?

Despite current challenges, AMD’s CEO Dr. Lisa Su is optimistic about the future. The strong demand for AMD’s data center products and its strategy for emerging trends suggest a bright long-term outlook.

Leave a Comment