Categories Analysis, Earnings

Earnings preview: AMD well poised to tackle challenges

Advanced Micro Devices Inc. (AMD) had a strong turnaround in the first quarter, and the stock gained more than 70% since then. The frenetic buying activity that followed the earnings release is continuing amid new product launches and the growing demand for microprocessors globally. That’s enough reason for the market to be optimistic about the company’s second quarter.

Analysts expect the Santa Clara, California-based company to post earnings of $0.13 per share on revenues of $1.72 billion when it reports second-quarter results Wednesday after the market closes. While investors are looking for a repeat of the last quarter this time too, there are concerns that the falling demand for graphics cards among cryptocurrency miners would be a disadvantage. In the previous quarter, GPU sales accounted for about 10% to overall revenues.

Experts are of the view that the softness in GPU sales will be offset by strong demand for AMD’s advanced Ryzen processors and mobile processors.  The Ryzen series has played a pivotal role in giving the company a significant advantage over rivals in the key segments of PC, enterprise, high-end notebooks, and gaming.

There are concerns that the falling demand for graphics cards among cryptocurrency miners would affect the Q2 results

Overall, AMD stands to benefit from the recent rebound of the PC market, which many believe is unexpected, and the competitive advantage over Intel (INTC).  Also, the wide-spread growth of data centers is expected to continue in the near term, generating additional demand for processors.

RELATED: AMD stock on growth path

The progress achieved by AMD in the race to come out with the early 7nm (nanometers) processors puts it at an advantageous position over rivals. The upbeat investor sentiment also reflects the growth potential of the company’s EPYC server processors, an area where Intel is lagging behind.

For the first quarter, AMD posted non-GAAP earnings of $0.11 per share, compared to in-line results in the same period last year. The growth reflects the consistent demand for chips in the gaming and data center segments which lifted revenues by 40%.

RELATED: AMD launches at Computex 2018 

Intel, which has been losing out to AMD in the recent quarters, is expected to release second-quarter results on July 26. NVIDIA (NVDA) is scheduled to report results for its most recent quarter on August 16.

AMD shares hit a 13-year high in mid-June and retreated in the later part of the month, before regaining momentum. The stock traded lower in the early hours of Monday’s session.

Most Popular

United Parcel Service (UPS) seems on track to regain lost strength

Cargo giant United Parcel Service, Inc. (NYSE: UPS) ended fiscal 2023 on a weak note, reporting lower revenues and profit for the fourth quarter. The company experienced a slowdown post-pandemic

IPO Alert: What to look for when Boundless Bio goes public

Boundless Bio is preparing to debut on the Nasdaq stock market this week, and become the latest addition to the list of biotech firms that have launched IPOs this year.

Nike (NKE) bets on innovation and partnerships to return to high growth

Sneaker giant Nike, Inc. (NYSE: NKE) has been going through a rough patch for some time, with sales coming under pressure from weak demand and rising competition. Post-pandemic, the company

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top