Shares of Advanced Micro Devices (AMD) are down 6% after the microchip and semiconductor company provided guidance for this year’s first quarter that fell short of Wall Street expectations.
The soft guidance was issued along with the company’s fourth-quarter earnings report that was largely in line with analysts’ forecasts.
AMD, as the company is commonly known, reported earnings per share (EPS) of $0.77 U.S., which matched the consensus expectation of analysts.
Revenue for Q4 2023 totaled $6.17 billion U.S. versus $6.12 billion U.S. that was forecast on Wall Street.
However, for the current first quarter of 2024, AMD said that it expects about $5.4 billion U.S. in sales, plus or minus $300 million U.S.
That outlook for Q1 fell short of the $5.73 billion U.S. of revenue that analysts had been looking for from the company, sending its share price lower as a result.
AMD added that it anticipates some of its major business segments, notably personal computer (PC) chips, to decline sequentially during the current quarter.
The company also said that its data centre revenue would be flat in Q1 as declines in server central processing units (CPUs) are offset by sales of graphics processing units (GPUs).
On a positive note, AMD gave a bullish update on its artificial intelligence (A.I.) chips sales.
Last fall, AMD said it expected $2 billion U.S. in A.I. chip sales in 2024. The company now expects $3.5 billion U.S. of A.I. chip sales this year as demand remains strong.
AMD’s data centre business, which includes A.I. chips, rose 38% on an annual basis in Q4 2023 to $2.28 billion U.S. in sales. It’s now AMD’s largest business segment.
Previously, AMD’s main business was developing microchips for PCs and servers. That segment, mostly chips for PCs and laptop computers, rose 62% year-over-year in Q4 2023 to $1.46 billion U.S. due to new microchip launches.
Sales in AMD’s video game segment, which includes processors for the Xbox and PlayStation consoles, fell 17% in the final quarter of last year. AMD blamed slower console sales for the decline.
Prior to today (Jan. 31), AMD’s stock had risen 105% over the last 12 months to trade at $172.06 U.S. per share.
