AMD Investors Pull Back After Modest Q1 Beat, Lukewarm Guidance; CEO Touts AI Chip Ramp-Up (UPDATED)

Editor’s note: This story has been updated with additional details.

Chipmaker Advanced Micro Devices, Inc. AMD reported Tuesday after the close with first-quarter results that came in slightly ahead of expectations thanks to record data center revenue. The stock retreated in after-hours trading, likely due to second-quarter revenue guidance that fell short of consensus estimates on the low end.

AMD’s Key Q1 Metrics: Santa Clara, California-based AMD’s first-quarter earnings and sales rose modestly year-over-year, although both metrics fell from the previous quarter.

Here’re how the main metrics compared to expectations:

	Q1’24 Actual	Q1’24 Consensus*	Q1’24 Guidance	Y-o-Y Change	Q-o-Q Change
Revenue	$5.47B	$5.46B	$5.4B +/- $300 M	+2%	-11%
Non-GAAP EPS	62 cents	61 cents	N/A	+4%	-19%
Non-GAAP gross margin	52	N/A	52%	+2 points	+1 point

Rival Intel reported last week with a slight miss on first-quarter revenue and below-consensus guidance for the second quarter. Intel stock slumped over 9% in reaction to earnings.

“We delivered strong first quarter results with our Data Center and Client segments each growing more than 80% year-over-year driven by the ramp of MI300 AI accelerator shipments and the adoption of our Ryzen and EPYC processors,” said AMD Chair and CEO Lisa Su.

“This is an incredibly exciting time for the industry as widespread deployment of AI is driving demand for significantly more compute across a broad range of markets. We are executing very well as we ramp our data center business and enable AI capabilities across our product portfolio.”

Before the earnings report was published, Rosenblatt’s Hans Mosesmann called for an in-line print, with a slight positive bias, premised on strong MI300 AI accelerator sales and EPYC experience gains in CPUs.

AMD's Businesses – How They Fared In Q1: Data Center segment revenue landed at a record $2.3 billion, up 80% year-over-year, driven by growth in both AMD Instinct GPUs and fourth-generation AMD EPYC CPUs. 

Analysts were bracing for a strong server compute business thanks to improving end markets and market share gains

Client segment revenue was $1.4 billion as AMD Ryzen 8000 Series processor sales remained robust even as analysts expected PC headwinds to impact results. PC shipments fell year-over-year for a second straight quarter, according to data from Gartner.

On the other hand, both Gaming and Embedded businesses reported year-over-year and sequential revenue declines, with the former impacted by weak semi-custom revenue and lower AMD Radeon GPU sales, while inventory correction at the customer level weighed down on the latter.

	Q1’24 Revenue	% of Total Revenue	Y-o-Y Growth	Q-o-Q Growth
Data Center	$2.3B	42%	80%	2%
Client segment	$1.4B	26%	85%	(-6%)
Gaming segment	$922 million	17%	(-48%)	(-33%)
Embedded segment	$846 million	15%	(-46%)	(-20%)

See Also: Best Artificial Intelligence Stocks

AMD guided to second-quarter revenue of $5.7 billion plus or minus $300 million and a non-GAAP gross margin of about 53% against Street estimates of $5.7 billion in second-quarter revenue.

Street expectations for fiscal year 2024 are for earnings of $3.40 per share and revenue of $24.13 billion, respectively.

AMD Price Action: AMD, which ended Tuesday’s regular session down 1.14% at $158.38, fell 4.22% to $151.70 in after-hours trading, according to Benzinga Pro data. The stock hit an all-time closing high of $211.38 on March 7 but has since slipped back from the peak. For the year-to-date period, the stock has added 7.44% compared to Nvidia’s 74.48% jump and the iShares Semiconductor ETF SOXX’s 11.55% gain.

Analysts are optimistic the company will rise over the next year. The average AMD analyst price target, according to TipRanks, is $203.96, suggesting over 27% upside.

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Photo courtesy of AMD.