AMD stock rose Wednesday after the chipmaker reported stronger-than-expected data center chip sales in the fourth quarter. But Advanced Micro Devices tempered that news with soft guidance for the current period.
The Santa Clara, Calif.-based company late Tuesday said it earned an adjusted 69 cents a share on sales of $5.6 billion in the December quarter. Analysts polled by FactSet had expected AMD earnings of 67 cents a share on sales of $5.51 billion.
On a year-over-year basis, AMD earnings fell 25% while sales rose 16%. The acquisition of Xilinx boosted revenue and helped offset declining PC and gaming chip sales.
In the fourth quarter, AMD's PC chip sales dropped 51% year over year to $903 million amid weak personal computer demand. Gaming segment revenue slid 7% to $1.6 billion.
Meanwhile, data center chip sales increased 42% to $1.7 billion, driven by Epyc server processors.
AMD Stock Rises After Report
For the current quarter, AMD predicted sales of $5.3 billion, down 10% year over year. Analysts were looking for $5.5 billion in the first quarter.
On the stock market today, AMD stock jumped 12.6% to close at 84.64. During the regular session Tuesday, AMD stock climbed 3.7% to 75.15.
"Although the demand environment is mixed, we are confident in our ability to gain market share in 2023 and deliver long-term growth based on our differentiated product portfolio," Chief Executive Lisa Su said in a news release.
Wall Street Divided On News
AMD's fourth-quarter report offered something for bulls as well as bears. At least four Wall Street analysts raised their priced targets on AMD stock while three lowered their targets.
AMD expects the PC market to bottom in the first quarter. The company also sees cloud computing customers working to digest chip inventory in the first half of the year.
AMD hopes to counter the headwinds in the overall market by taking share from rival Intel. But those efforts are likely to cut the company's profit margins, analysts say.
AMD stock ranks No. 12 out of 34 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. It has a so-so IBD Composite Rating of 72 out of 99. The Composite Rating scores a stock's key growth metrics against all other stocks regardless of industry group.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
