Advanced Micro Devices stock fell in late trading Tuesday after the chip maker gave a disappointing revenue forecast for its December quarter.
The chip maker reported third-quarter adjusted earnings per share of 70 cents, compared with Wall Street’s consensus estimate of 68 cents, according to FactSet. Revenue came in at $5.8 billion, which was above analysts’ expectations of $5.7 billion.
But AMD (ticker: AMD) said that fourth quarter revenue would be “approximately $6.1 billion, plus or minus $300 million.” Wall Street had estimated revenue of $6.4 billion for the quarter.
“Our data center business is on a significant growth trajectory based on the strength of our EPYC CPU portfolio and the ramp of Instinct MI300 accelerator shipments to support multiple deployments with hyperscale, enterprise and AI customers,” CEO Lisa Su said in the release.
Revenue in the chip maker’s data-center unit was flat from a year earlier in the September quarter, while revenue in its client PC business was up 42%. AMD’s gaming business declined by 8% in the same period. Overall revenue was up by 4% year over year.
CFO Jean Hu said in the release that gaming-segment sales and deteriorating demand in its so-called embedded segment would be a drag on revenue in the current quarter.
AMD’s embedded unit includes its field-programmable gate array (FPGA) chip business. FPGAs are often used in the early stages of hardware development products due to their flexibility in allowing for subsequent changes in functionality.
According to the release, AMD’s widely anticipated MI300 accelerators are on track for volume production during the fourth quarter. The MI300, a data center graphics processing unit, is intended to be well-suited for AI projects and AI applications.
On a conference call with investors and analysts, Su said AMD expects data center GPU products to generate about $400 million in revenue for the fourth quarter and surpass $2 billion in 2024.
AMD shares initially fell as much as 5% in late trading following the report, but pared their losses after management provided guidance for its data center GPU business. The stock was down 0.3% to $98.22 in the after hours session.
AMD shares were down 14% over the last three months as of Tuesday’s close. The
iShares Semiconductor ETF
(SOXX), which tracks the performance of the ICE Semiconductor Index, has declined 17% for the same period.
Write to Tae Kim at tae.kim@barrons.com
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