AMD’s 4th quarter net income declines as PC sales decline

Key points to remember

  • Advanced Micro Devices Inc. (AMD) is expected to post fourth-quarter EPS of $0.19, down nearly 80% from a year ago.
  • Revenue growth has likely fallen to its slowest pace since before the pandemic.
  • Analysts will look to the chipmaker’s data centers, where it is expected to have taken more market share from rival Intel.

Advanced Micro Devices Inc. (AMD) net profit likely fell nearly 80% in the fourth quarter as revenue growth fell to its slowest pace in more than three years amid slowing sales of PC that likely offset the chipmaker’s robust data center business.

AMD is expected to post earnings of $0.19 per share, down 76% from a year earlier, according to Visible Alpha estimates. Revenue growth is expected to slow to 14% year-over-year from 29% in the third quarter, reflecting a second quarter of contraction in the company’s PC processor sales. The declines come even as the company, which reports after markets closed on Tuesday, expanded its market share in data centers.

These gloomy forecasts reflect the difficult environment facing the semiconductor industry. Total PC shipments fell nearly 30% in the fourth quarter, the largest quarterly decline on record, as consumers curbed spending amid rising prices and a deteriorating economic outlook.

Weak demand and excess inventory weighed heavily on rival Intel (INTC), whose shares fell last week after forecasting a net loss in the first quarter of 2023. Analysts were worried about AMD’s profitability even before Intel’s gloomy forecasts. Bernstein analyst Stacy Rasgon downgraded AMD to market performance from outperformance last week, saying the chipmaker had “zero margin for error.”

AMD shares have fallen 32% in the past year, compared to a 17% decline for the S&P 500 information technology sector.

Source: Trading View.
AMD Key Statistics
Estimate for the fourth quarter of fiscal 2022 Q4 2021 Q4 2020
Adjusted earnings per share ($) 0.19 0.80 1.45
Revenue ($B) 5.5 4.8 3.2
Data Center Revenue ($B) 1.7 1.2 0.5

Source: VisibleAlpha

Key indicators

AMD’s market share in the data center market continued to grow steadily. Even with the decline in total revenue, data center revenue is expected to increase 48% to $1.7 billion from $1.2 billion in Q4 2021. AMD’s new Genoa processor is said to offer better cloud computing performance than competing products from Intel.

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