AMD Beats Revenue Estimates as It Pushes Deeper Into Servers

(Bloomberg) — Superior Micro Gadgets Inc. climbed in late buying and selling after an enlargement into server processors helped offset a slumping personal-computer market final quarter and the chipmaker vowed to make additional positive factors.

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Revenue topped analysts’ predictions within the third quarter, with gross sales coming in roughly in step with projections. Within the present interval, income can be roughly $5.5 billion. Although that missed the common estimate of about $5.9 billion, it represents a rise at a time when a number of of AMD’s friends are struggling contractions.

Chief Government Officer Lisa Su assured buyers {that a} lengthy turnaround of the chipmaker continues to be on track, helped by market-share wins. The corporate expects gross sales to extend about 14% within the fourth quarter, in distinction with double-digit declines at rivals Intel Corp. and Nvidia Corp.

“We consider we’ll proceed to realize share” within the data-center market, Su instructed analysts on a convention name. “We’re planning for a weaker PC atmosphere within the fourth quarter,” in the meantime, as prospects lower stock and the corporate ships fewer components, she stated.

Underlining how necessary servers have gotten to AMD’s funds, the corporate’s data-center unit posted a income improve of 45% from a 12 months earlier. That helped cushion the impression of a 40% drop in its personal-computer chip income. Sturdy demand for game-console components — it provides Microsoft Corp. and Sony Group Corp. with customized chips — helped enhance gross sales for AMD’s gaming division by 14%.

The outcomes helped ship the shares up as a lot as 7.1% in prolonged buying and selling.

AMD had warned in October that its third-quarter efficiency would fall in need of projections, and different chipmakers — together with Intel and Nvidia — have offered gloomy outlooks for the trade. Dealing with a shaky economic system and hovering inflation, customers and companies have turned away from shopping for computer systems.

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In opposition to that backdrop, AMD’s numbers have been a bit higher than anticipated. Revenue was 67 cents a share within the interval, excluding some gadgets. Analysts had estimated 65 cents.

Traders have been searching for indicators of whether or not the steep PC decline will proceed — and take the market again to pre-Covid depths — or settle on the increased stage. A rebound to the heights of the early pandemic is now wanting more and more unlikely. Su stated that the corporate is assuming that the PC market will decline about 10% in 2023.

Within the third quarter, PC shipments fell 15% to 74 million from the identical interval a 12 months earlier, in line with IDC. The trade had loved a resurgence in the course of the pandemic, when the work-from-home pattern fueled demand for tools.

Underneath Su, AMD had confirmed much less prone to market fluctuations as a result of it’s taken share from bigger rival Intel with new merchandise. However within the third quarter, Intel stated it took again share in PCs. Su stated that AMD had determined to not match a number of the value cuts supplied by its competitor.

Su’s largest coup, although, has been the breakthrough within the worthwhile marketplace for processors that run server machines. In that space, AMD has gone from a share of lower than 1% to a double-digit proportion. Su’s counterpart at Intel, Pat Gelsinger, stated final week he expects robust competitors in servers to proceed.

AMD shares closed at $59.66 in New York on Tuesday, leaving them down 59% this 12 months. With fears of a deepening slowdown weighing on the corporate, AMD has been one of many worst-performing semiconductor shares in 2022 following a four-year surge.

(Updates with CEO feedback beginning in fourth paragraph.)

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