Advanced Micro Devices, Inc. (AMD) is set to report its second-quarter earnings after the market closes. Analysts are eagerly anticipating the results and the company’s plans for growth drivers in the future.
Analysts expect AMD’s earnings per share (EPS) for the second quarter to drop to 52 cents, a significant decrease from the $1.05 per share reported in the same period last year. Overall revenue is also expected to decline by 26.50% year-over-year and 11% from the previous quarter. These expectations have been revised down from the initial forecast of 62 cents per share at the beginning of the quarter.
Despite the projected decline, AMD has consistently beaten bottom-line expectations in recent quarters. However, the company’s competitor, Intel Corp., reported better-than-expected revenue and an unexpected profit last week. Intel’s strong performance was partially attributed to a less severe year-over-year decline in the PC market.
In terms of specific business segments, AMD’s client computing and data center and AI groups experienced sequential growth. However, networking and edge group revenue declined compared to the previous year and quarter, mainly due to sluggish Chinese market conditions and weakened telco spending.
AMD has guided for a second-quarter non-GAAP gross margin of 50%, which remains flat compared to the previous quarter. Looking ahead, analysts estimate that AMD will report non-GAAP EPS of 66 cents and revenue of $5.28 billion for the third quarter.
Some analysts express caution regarding the third quarter outlook, citing cautious comments from Taiwan Semiconductor Manufacturing Company Limited, Nokia Oyj, and Ericsson. Despite this, analysts remain optimistic about AMD’s future prospects, particularly with the upcoming launch of the MI300X generative AI GPU in the fourth quarter. Analyst Srini Pajjuri believes there is significant potential for AMD to capture a 10-20% share in the inferencing market, generating multi-billion dollar revenues with accretive margins.
AMD’s stock has performed well this year, mirroring the positive sentiment towards tech stocks. The company’s shares have increased by approximately 77% year-to-date, outpacing the 54.4% advance of the iShares Semiconductor ETF.
According to data from TipRanks, the average analysts’ price target for AMD is $136.36, suggesting about 19% upside from its current levels.
In premarket trading, AMD’s stock saw a slight increase of 0.09% to $114.50.
Overall, market analysts are closely watching AMD’s second-quarter earnings report as they await insights into the company’s transition period and future growth drivers.
