Advanced Micro Devices (AMD) missed quarterly sales forecasts, leading its shares to fall by more than 6% in extended trading on Tuesday. The US-based chipmaker predicted quarterly sales below expectations due to a weak PC market. AMD also missed analysts’ estimates for PC and data centre chips sales for Q1.
In contrast, rival Intel reported that the PC market would rebound in H2 2023, with its shares rising nearly 3% in extended trading. Although AMD has taken market share in the data centre, some analysts predict that the company will face stiffer competition from Intel in the future.
MI300 Chip
AMD CEO Lisa Su told investors that Q1 was the bottom of the market for the company’s PC business and the industry. Su noted that part of AMD’s growth would come from the MI300 chip, which will compete with Nvidia’s flagship chips for artificial intelligence. Su added that customer interest in the MI300 chip was growing and that the company expected to begin ramping up revenue in Q4 2023.
Revenue Forecast
AMD expects current-quarter revenue to be approximately $5.3 billion (roughly Rs. 43,400 crores), plus or minus $300 million (roughly Rs. 2,500 crores). Analysts polled by Refinitiv were anticipating revenue of $5.48 billion (roughly Rs. 44,800 crores). Despite missing expectations, Su remains confident in the company’s ability to grow in H2 2023.
Analysis
Analysts suggest that AMD faces stiff competition in the data centre market from Intel. The release of Sapphire Rapids, Intel’s most powerful data centre processor chip code, was delayed for more than a year, allowing AMD to gain market share. However, some analysts predict that AMD’s ability to take large swaths of market share will be over, and it will face a more aggressive market competing with Intel.
Kinngai Chan, an analyst at Summit Insights Group, suggested that the MI300 chip would be used primarily on special projects or on a case-by-case basis, adding that it is likely to be inferior to Nvidia’s latest H100 data centre chip for large language model applications, such as ChatGPT.
In Summary
AMD missed Q1 sales forecasts due to a weak PC market, while also falling short of analyst estimates for PC and data centre chips sales. AMD’s shares fell over 6% in extended trading. Despite this, the company is optimistic about its future, with CEO Lisa Su saying that the first quarter was the bottom of the market for the company’s PC business and the industry.
AMD expects to ramp up revenue in Q4 2023 with the MI300 chip, which will compete with Nvidia’s flagship chips for artificial intelligence. However, some analysts suggest that AMD will face stiffer competition in the data centre market, primarily from Intel.
