AMD: 3 Key Highlights from Mixed Q4 Results

February 1, 2024

Advanced Micro Devices, Inc (NASDAQ: AMD), a leading semiconductor company, recently released its Q4 results, which were in line with expectations. However, the company’s outlook for the next quarter fell below projections with a weaker-than-expected performance in the Core business segment the past quarter.

On a positive note, AMD’s artificial intelligence (AI) revenue is tracking ahead, and management raised its 2024 outlook for MI300 from $2 billion to $3.5 billion. Despite the mixed results, the company’s execution track record and the significant opportunity in the AI market make AMD an attractive investment option.

AMD’s revenue of $6.17 billion and non-GAAP earnings per share (EPS) of $0.77 for Q4 was largely in line with expectations of $6.14 billion and $0.77, respectively.

Read more below to find out some of the key takeaways from AMD’s mixed earnings report.

1. Data Center Performance may have been below outlandish expectations, but it is still positive.

The data center segment, driven by Genoa CPU ramps and share gains, performed well during the quarter. AMD’s AI driven data center revenue is performing well and is ahead of expectations. Management raised its outlook for MI300, a key product in the AI space, from $2 billion to $3.5 billion, which indicates growing customer adoption and improving supply which the management does expect to continue. However, the outlook may have fallen short of recent investor expectations.

2. Personal Computing, Gaming and Embedded still see headwinds

AMD sees the PC segment grow slightly but also expects a seasonal decline in the next quarter. AMD also experienced weaker performance in the gaming and embedded segments. Gaming revenue declined 9% quarter-on-quarter (QoQ) due to weaker Semi-Custom sales, and management expects continued weakness in 2024, with a 30% QoQ decline expected in the next quarter. Embedded revenue also declined 15% QoQ due to an ongoing cyclical correction, with further declines expected in the next quarter before stabilizing.

3. The outlook for the next quarter came in below expectations.

The company’s revenue estimates of $5.4 billion for the next quarter come in below expectations of $5.7 billion. Whilst this may have been the market overestimating the impact of AI, the outlook is still disappointing.

Challenges ahead for AMD but AI growth story continues to remain key driver

While AMD’s recent results were mixed, the company’s strong performance in the AI segment and its track record of execution make it an appealing investment opportunity. While the stock continues to face potential risks associated with weaker outlooks in the gaming and embedded segments, the significant growth potential in the AI market and AMD’s position in the industry continues to make it an attractive investment opportunity for investors to consider.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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