AMD And Intel Top Expectations Despite The PC Market Crash And Economic Slowdown

Despite the PC industry being in the slump, Advanced Micro Devices AMD reported better than-expected first quarter sales and earnings, despite chip sales plummeting 64%. Last week, Intel Corporation INTC also managed to beat expectations while its revenue collapsed 36%. 

First Quarter Key Figures

Revenue for the first three months of the year tanked 9% to $5.35 billion while CNBC reported analyst expectations averaged to $5.3 billion. Unlike the net income of $786 million, or 56 cents per share that AMD earned during last year’s comparable quarter, this time it made a net loss of $139 million, or 9 cents per share. The adjusted EPS amounted to 60 cents per share, topping the expected 56 cents. 

The group where sales from PC processors belong to marked the biggest decline as revenue dropped nearly 65% YoY to $739 million, significantly below the expected $908 billion, according to Bloomberg. 

The Data Center unit generated $1.29 billion in revenue, also below the expected $1.46 billion.

Gaming Concerns

The gaming segment which includes chips for game consoles like the ones from Sony Group Corporation SONY as well as graphics processors for PCs, generated revenues of $1.76 billion, a slight drop from last year’s $1.88 billion. It topped $1.52 billion tha Bloomberg expected. Even Sony Group’s shares fell upon news of outlook that was below expectations, despite a record full year annual operating profit. In its fourth quarter that was reported on April 28th, Sony reported its Game & Network services revenue increased an impressive 61.3% YoY. But concerns over Sony PlayStation’s prospects owed to electronics demand likely to remain weak amid global economic  slowdown and weak software momentum which is the lucrative part of the game business overshadowed Sony’s record results. 

AMD And Intel Are In The Same ‘Pickle’

Both chip peers are facing a steep decline in both PC and data center sales, while both consumers and business are cutting back on costs as inflation rocks on. In its latest reported quarter, Intel’s PC and data center revenues tanked 38% and 39% respectively. Intel is pursuing a massive turnaround strategy in an effort to regain the market share it lost to AMD, but along with a PC slowdown it is facing, it is also lacking significant exposure to the AI boom, one that Nvidia Corporation NVDA has.   

Outlook

AMD CEO Lisa Su noted that growth is expected in the second half of the year as the PC and server markets recover. Su finds that AMD performed very well in a mixed demand environment where the PC market is having one of the worst times in its history. Despite falling short on both data center and client revenue, AMD topped both top and bottom line expectations. As of Tuesday afternoon, AMD shares are up 37%, while Intel is significantly behind with its shares being up only 14%.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.