- Advanced Micro Devices’ (AMD) shares dropped nearly 9% in after-hours trading despite beating Q4 earnings expectations with $1.09 per share and $7.66 billion in revenue.
- The decline was due to underperformance in the Data Center segment, which, despite a record $3.9 billion and 69% YoY growth, missed investor expectations.
- AMD provided in-line Q1 guidance with expected revenues of $6.8-7.4 billion and a non-GAAP gross margin of about 54%, reflecting mixed segment performance with strong client growth but declines in gaming and embedded sectors.
Advanced Micro Devices (AMD) experienced a significant drop in its stock price, falling $10.34 or 8.65% to $109.07 in after-hours trading, despite reporting fourth-quarter results that surpassed Wall Street’s expectations for both earnings per share and revenue. The company’s revenue for the quarter ending December 28 was $7.7 billion, marking a 24.2% increase from the previous year and beating the consensus estimate of $7.53 billion. Earnings per share came in at $1.09, excluding non-recurring items, slightly above the expected $1.08.
However, the stock’s decline can be attributed to underperformance in the crucial Data Center segment, where revenue, although reaching a record $3.9 billion with a 69% year-over-year growth, did not meet investor expectations due to the specifics within the segment’s growth dynamics. This segment’s increase was primarily fueled by a strong ramp-up in AMD Instinct GPU shipments alongside robust growth in AMD EPYC CPU sales.
On the positive side, AMD’s Client segment also set a record with revenue of $2.3 billion, up 58% from the previous year, driven by high demand for AMD Ryzen processors. However, not all segments contributed to this growth; the Gaming segment saw a sharp decline, with revenue dropping 59% to $563 million due to lower semi-custom revenue. Similarly, the Embedded segment’s revenue decreased by 13% to $923 million, reflecting mixed end-market demand.
Looking forward, AMD provided in-line guidance for the first quarter, projecting revenues between $6.8 billion and $7.4 billion, aligning with the consensus estimate of $7 billion. The company also anticipates maintaining a non-GAAP gross margin of approximately 54%.
This mixed bag of results highlights AMD’s pivotal role in the tech industry’s shift towards AI and high-performance computing, underscored by its advancements in GPU and CPU offerings. Yet, the market’s reaction suggests a focus on short-term segment performance rather than the overall financial health and strategic positioning of AMD in a rapidly evolving tech landscape.
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