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Semiconductors Trade Alert

Trade Alert: AMD at $166 – Buying on Declines Between $150 and $160

Advanced Micro Devices (AMD) $166 – Buy on Declines – $150 to $160

EPS: $0.77 per share, adjusted, versus $0.77 per share expected

Revenue: $6.17 billion, versus $6.12 billion expected

Data Center revenue $2.28Bn in line V $2.29 expected.

Guidance is light:

Q1-24 $5.4Bn in sales, plus or minus $300 million, V $5.73 Bn expected.

Flat data center revenue with server chip declines to be offset by AI GPU sales. We saw weak data center revenue from Intel, this is definitely some cannibalization and likely to continue, till AI GPU starts taking a larger share of the pie.

Client Group – The recovery in PC’s helped AMD’s client group,which rose 62% year-over-year to $1.46 billion in sales, which the company said was boosted by recent chip launches.

Gaming, which includes “semi-custom” processors for Microsoft Xbox and Sony Playstation consoles, fell 17%. AMD blamed slower console sales, and said it expected semi-custom revenue to decline by a “significant” double-digit percentage in the current quarter. This is a low margin business and drags AMD’s overall margins.

AMD’s embedded segment, which includes chips for networking, reported $1.1 billion in sales, down 24% on an annual basis.

The stock has already fallen 8% from its high of $180, it also caught an earnings downgrade this afternoon.

The earnings call should be interesting for the AI GPU guidance for Q3, Q4, I will start nibbling below $160, this could be a good opportunity for the long term.