Advanced Micro Devices stock
On January 29, Advanced Micro Devices (AMD) stock rose 9% in the after-hours trading session. The company’s fourth-quarter earnings and first-quarter guidance fell short of analysts’ estimates. The stock had priced in the worst earnings figures. NVIDIA (NVDA) lowered its fiscal 2019 fourth-quarter guidance by 18%. Intel (INTC) missed the revenue and guidance estimate before Advanced Micro Devices’ earnings.
Advanced Micro Devices stock rose on due to the better-than-expected fiscal 2019 guidance.
Advanced Micro Devices’ fourth-quarter revenues rose 6% YoY (year-over-year) but fell 14% sequentially to $1.42 billion—lower than analysts’ estimate of $1.44 billion. Ryzen and EPYC CPUs (central processing units) and Radeon datacenter GPUs (graphics processing units) accounted for 65% of the fourth-quarter revenues. A higher mix of new products improved Advanced Micro Devices’ non-GAAP gross margin to 41% and the operating margin to 7.7% from 3% and 7% last year.
The company’s revenues fell sequentially. Strong CPU and data center GPU sales were more than offset by declines in consumer GPUs due to excess GPU inventory caused by the crypto bubble burst.
Advanced Micro Devices expects the consumer GPU weakness to continue to pull its YoY revenue growth in the first half. The previous year, the revenues included crypto-related sales. However, the company expects strong growth in the second half of 2019 to make up for the declines in the first half and result in fiscal 2019 revenue growth the high-single digits, which is above analysts’ estimate of 6.4% growth.
In the fourth-quarter earnings call, Lisa Su, Advanced Micro Devices’ CEO, stated that the growth in the second half of 2019 will be high. Last year’s earnings will exclude crypto-related sales. The second half will see a sell-off of excess GPU inventory giving way for sales of new GPUs. All of Advanced Micro Devices’ 7-nanometer products will hit the market in the second half.
Su expects Advanced Micro Devices’ 2019 growth to largely come from data center even though NVIDIA and Intel report weakening demand from cloud customers. Advanced Micro Devices is impacted less by the overall slowdown in demand. The company has enough room to grow by gaining market share from competitors.
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