AMD, Intel And Qualcomm Provided Hope That The Chip Industry Is Returning To Health

Advanced Micro Devices AMD reported a weaker-than-expected outlook that overshadowed its strong third-quarter results. Upon the report, shares fell more than 2% in pre-market trading on Wednesday. AMD is one of the few chipmakers with the capability to make high-end graphics processing units (GPUs) without which generative AI models cannot be trained or deployed and the chipmaker is determined to catch up with the undebatable market leader, Nvidia Corporation NVDA. Last week, its rival Intel Corporation INTC topped profit and revenue estimates with its third quarter report and Qualcomm Incorporated QCOM boarded the AI PC train by unveiling new PC laptop chips with AI features for 2024 with which it promises to be the first to challenge Apple Inc AAPL and boost the AI rise of Microsoft Corporation MSFT.

AMD Topped Estimates With Its Third Quarter Results

For the September quarter, AMD reported revenue rose 4% to $5.8 billion, versus $5.7 billion expected. Net income in the third quarter rose to $299 million, or 18 cents per share, from $66 million, or 4 cents per share a year ago. Adjusted earnings amounted to 70 cents, topping LSEG’s and Investing.com’s estimate of 68 cents.

AMD Provided A Muted Outlook

AMD guided fiscal fourth-quarter revenue of $6.1 billion, up or down $300 million, which implies a 9% YoY growth rate while LSEG;’s estimate was $6.37 billion. CEO Lisa Su guided for data center GPU revenue of approximately $400 million in the fourth quarter, with the expectation to exceed $2 billion in 2024, in which case, the MI300 would enter AMD’s history as the product that was fastest to reach the $1 billion sales milestone.

AMD Continues To Go After Nvidia

In October, AMD revealed its plans to o buy an artificial intelligence startup called Nod.ai as part of an effort to uplevel its software capabilities. AMD will be investing heavily in the critical software necessary to make advanced AI chips that Nvidia excels at. With the acquisition of Nod.ai, its second in the past few months, AMD is gaining the technology it needs to deploy AI models that are tuned for AMD's chips more easily. 

Intel Showed The PC Market Is Rebounding With Its Latest Quarterly Report 

Last week, Intel shares popped on Friday upon its third quarter report that topped earnings and revenue estimates even with its revenue declining YoY. Earnings benefited from Intel’s cost management efforts as it aims to trim its costs by about $3 billion this year. For the quarter ended on October 1st, Intel reported revenue dropped 8% YoY to $14.16 billion, topping LSEG’s estimate of $13.53 billion. Intel made a net income of $297 million, or 7 cents per share while adjusted earnings amounted to 41 cents, easily topping LSEG’s estimate of 22 cents. As it continues to execute its “five nodes in four years” strategy to catch up with Taiwan Semiconductor Manufacturing Company Limited TSM chipmaking technology by 2025, Intel believes its chips will be useful for running AI models on local devices, as opposed to on the cloud. 

Qualcomm Is Going After AMD, Intel And Even Apple

A week ago, Qualcomm announced two new chips, one for PCs and laptop, and another for high-end Android phones. Qualcomm named its chip creations X Elite and Snapdragon. Claiming its new chips can go toe to toe with Intel, Apple Inc AAPL and AMD in terms of performance and efficiency. Qualcomm claims that its new chip for Microsoft Windows-based laptops will be faster at some tasks than chips that Apple makes for its Mac computers. Qualcomm will the first to market a chip that claims to challenge those of Apple. Qualcomm also counts on the support of Microsoft. Microsoft CEO Satya Nadella making a video appearance on Qualcomm’s event, saying that these chips will contribute to the making of the new AI PC era. However, one should also keep in mind that the exclusivity deal that Qualcomm has with Microsoft will be coming to an end next year, with Nvidia and AMD reportedly working together on Arm-based PC chips. 

By the looks of it, the chip industry certainly seems to be restoring its health after being hit by a sudden bust that followed the pandemic-induced boom.

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