Advanced Micro Devices Inc (NASDAQ: AMD) is trading up after the bell even though it disappointed both in terms of quarterly results as well as the future outlook.
Analyst reacts to AMD’s Q3 earnings
Shares are up for several reasons. To begin with, the semiconductor behemoth had already trimmed outlook last month (ອ່ານຕື່ມ) to reflect the historic global decline in PC shipments.
So, investors were focused more on “data centre” that AMD still expects will grow in the fourth quarter, not just on a year-over-year basis but also sequentially. On CNBC’s "ປິດກະດິ່ງ: ລ່ວງເວລາ", Bernstein’s Stacy Rasgon said:
I think that’s what people want. They want to know that any weakness that’s going on is strictly PC related because we all know that market is not great right now. Data centre seems to be holding in.
More importantly, the implied strength in data centre was particularly a pleasant surprise after Intel, just a week ago, painted a rather grim picture of that business and ກ່າວວ່າ it will continue to struggle moving forward.
Should you buy AMD shares?
Rasgon continues to recommend ຊື້ຮຸ້ນ AMD. His price objective of $95 represents more than a 50% upside from here.
The stock is pretty attractive as long as you still believe in that longer term growth rate, which I think is still there. The issues that AMD has are not structural. They’re taking share, their product portfolio is really good.
His thesis, essentially, is that “data centre” is already keeping resilient and the PC market will eventually recover.
AMD Q3 financial highlights
- Net income printed at $66 million versus last year’s $923 million
- Per-share earnings fell significantly from 75 cents to 4 cents only
- ປັບ EPS ແມ່ນ 57 ເຊັນຕາມ ຖະແຫຼງຂ່າວກ່ຽວກັບລາຍຮັບ
- ລາຍຮັບເພີ່ມຂຶ້ນ 29% ເມື່ອທຽບໃສ່ປີກາຍມາເປັນ 5.57 ຕື້ໂດລາສະຫະລັດ
- ຄວາມເຫັນດີເຫັນພ້ອມຂອງ FactSet ແມ່ນ 69 ເຊັນຕໍ່ຮຸ້ນໃນລາຍໄດ້ 5.65 ຕື້ໂດລາ
ມີຫຍັງອີກແດ່ທີ່ໜ້າສັງເກດ?
A 600 basis points hit to gross margin this quarter was related to acquisitions (Xilinx and Pensando).
Data centre sales were only slightly below estimates but up 45% on a year-over-year basis. “Gaming” and “Embedded” sales were also up versus last year and roughly in line with Street expectations.
Lastly, “Client” or PC sales, as expected, were down 40% – about $170 million shy of analysts’ forecasts.
AMD’s future guidance
ເປັນເວລາ XNUMX ປີເຕັມ, Advanced Micro Devices Inc expects data centre and embedded to drive a 43% annualised growth in revenue to $23.5 billion. It’s projecting gross margin to stand at 52% in 2022.
The Nasdaq-listed firm forecasts $5.50 billion in revenue in the current financial quarter. Experts had called for $5.95 billion in Q4 and $24.16 billion for the year.
Versus the start of the year, AMD shares are down nearly 60%.