Advanced Micro Devices shares sink on forecast miss as PC market remains weak
Sign up now: Get ST's newsletters delivered to your inbox
While AMD grabbed market share after Intel delayed the shipping of its most powerful data centre chip, some analysts said they were seeing AMD now stall.
PHOTO: REUTERS
BENGALURU – Advanced Micro Devices (AMD) shares slumped on Tuesday after the chipmaker forecast quarterly sales below estimates due to a weak personal computer market, overshadowing the company’s optimism that the chip market would start to recover in the second half of 2023.
The company also missed analyst estimates for PC and data centre chips sales for the first quarter, and its shares fell more than 6 per cent in extended trading.
This stood in contrast to rival Intel, whose shares rose nearly 3 per cent in extended trading. Intel last week said the PC market would start rebounding in the second half, raising Intel’s margins with it.
While analysts had watched AMD grab market share in the data centre segment after Intel delayed ramping up the shipping of its most powerful data centre processor chip, named Sapphire Rapids, for more than a year, some said they were seeing AMD now stall.
“I think AMD’s days of taking large swathes of share will likely be over, and it will probably see a more aggressive market for data centre competing with Intel,” said Mr Anshel Sag, analyst at Moor Insights & Strategy. “AMD has great products in data centre, but Intel still has a lot of customers who are still using Intel, and deep (customer) relationships.”
Still, AMD chief executive officer Lisa Su told investors on a conference call that the first quarter was the bottom of the market for the company’s PC business and the industry.
“We remain confident in our ability to grow in the second half of the year,” she said.
Part of that growth, Ms Su said, will come from a chip called the MI300, which will compete with Nvidia’s flagship chips for artificial intelligence (AI).
She added that customer interest in the chip is growing.
“We do believe that we will start ramping revenue in the fourth quarter with cloud AI customers, and then it will be more meaningful in 2024,” Ms Su said.
“Success for us is having a significant part of the AI overall opportunity,” she added.
Nvidia has the bulk of the AI market, and analysts believe it has a strong hold on its position.
“We believe MI300 will be used primarily on special projects or on a case-by-case basis,” said Summit Insights Group analyst Kinngai Chan, adding that the MI300 is likely to be inferior to Nvidia’s latest H100 data centre chip for large language model applications, such as ChatGPT.
AMD forecast current-quarter revenue of about US$5.3 billion (S$7.1 billion), plus or minus US$300 million. Analysts polled by Refinitiv were expecting revenue of US$5.48 billion.
Revenue in the fiscal first quarter to April 1 came in at US$5.35 billion, compared with estimates of US$5.3 billion. REUTERS
