AMD gives weak revenue forecast
The outlook renews stock concerns over computer processors
Advanced Micro Devices Inc., the second-biggest maker of computer processors, gave a weak revenue forecast for the current period, echoing rival Intel Corp.'s downbeat view of the PC and data center chip markets.
First-quarter revenue will be about $5.4 billion, AMD said in a statement Tuesday. The average analyst estimate was $5.77 billion. Gross margin — the percentage of sales remaining after deducting the cost of production — will be about 52%, in line with projections.
The outlook renews concerns that customers are holding off on purchases in AMD's core markets: PCs, servers, game consoles and programmable processors. Though the company is pushing into artificial intelligence accelerators — a lucrative area where Nvidia Corp. dominates — it's still early in that expansion.
The company unveiled a line of AI accelerators last month called the MI300.
AMD has predicted sales of more than $2 billion for the lineup in 2024.
AMD fell about 2% in extended trading following the announcement after closing at $172.06 in regular trading.
AMD's stock has been one of the favorite picks of investors looking for ways to bet on AI computing. Its shares are the second-best performing stock on the Philadelphia Stock Exchange Semiconductor Index this year, gaining 17%, after a similar performance in 2023.
The big question is whether AMD's MI300 processors can challenge the dominance of Nvidia and its H100. That company's revenue doubled in the latest fiscal year, according to estimates.
Intel, meanwhile, has suffered tepid demand in the market for programmable processors, an area where it also competes with AMD. In its quarterly report last week, Intel said the lucrative market for data center processors is weakening as well. Three months ago, AMD had warned investors that demand for game console and embedded processors was slower.
AMD's fourth-quarter earnings were 77 cents a