Advanced Micro Devices Inc. AMD witnessed a significant surge in its stock price after the company’s second-quarter results exceeded expectations, validating the decision of a prominent investor to reinvest in the chipmaker.
What Happened: AMD’s revenue for the quarter rose by 9% to $5.84 billion, surpassing the estimated $5.72 billion,. The adjusted earnings per share also increased by 19% to 69 cents, a cent above the estimates. The company’s data center business, particularly its new artificial intelligence chip, the MI300X, played a pivotal role in this performance.
Jim Cramer, a well-known investor, and host of “Mad Money” on CNBC, expressed his confidence in AMD’s future. He highlighted the company’s CEO, Lisa Su, as a key factor in AMD’s success, stating that “AMD’s results proved our plan to reinvest in the stock was right.”
The news of the strong earnings report caused AMD’s stock to jump over 7% in after-hours trading, providing a much-needed boost after a difficult period for the company and the tech industry as a whole.
Why It Matters: The recent surge in AMD stock follows a period of uncertainty and market pressure. In May Cramer commented that AMD under $150 would be ‘terrific’, but noted that it doesn’t match up to NVIDIA Corp. NVDA.
AMD shares rebounded after the company posted a second-quarter beat and provided guidance that topped expectations. CEO Su emphasized the accelerating AI business, which helped the stock rise in after-hours trading. This was a significant rebound from earlier market pessimism about potential cutbacks in orders from Microsoft Corp. MSFT and competition from Nvidia.
Additionally, the second-quarter report was crucial as it provided insights into AI-related spending, a key area where AMD is catching up to Nvidia. The company was expected to report second-quarter earnings of $0.68 per share, up from $0.58 per share in the year-ago quarter.
The earnings report came at a pivotal moment for the tech sector, with several mega-cap tech giants, including Microsoft, Apple Inc, AAPL, and Amazon.com, Inc, AMZN, also reporting their quarterly earnings in the same week. This collective reporting period was seen as a decisive market test for the elite group known as the Magnificent Seven.
Price Action: AMD shares surged 7.64% in after-hours trading, reaching $149.02, after closing Tuesday’s regular session at $138.44, a decrease of 0.94%, according to Benzinga Pro data.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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