The Numbers
Advanced Micro Devices (AMD) reported a mixed quarter that has investors parsing the details closely. The company posted adjusted Earnings Per Share (EPS) of $1.08, narrowly beating the consensus estimate of $1.05. However, the top line came in slightly light, with revenue of $6.45 billion, missing Wall Street's expectation of $6.50 billion. While the EPS beat is a positive signal on margin control, the revenue miss, however small, points to pockets of weakness.
- Reported Revenue: $6.45B
- Consensus Revenue Estimate: $6.50B (Miss)
- Reported Adj. EPS: $1.08
- Consensus EPS Estimate: $1.05 (Beat)
The Guidance
Guidance is where the real story unfolds, and it's a tale of two businesses. Management guided next quarter revenue to a range centered on $6.2 billion, significantly below the analyst consensus of $6.4 billion. This shortfall is being attributed to continued softness in the gaming and embedded segments. On the other hand, the company provided a major boost to its full-year Data Center GPU forecast, raising the outlook for its MI300X AI accelerators from $4 billion to $5 billion in sales for the year. This signals tremendous momentum in their AI division. You can See Live Earnings Releases to compare this guidance with peers.
Market Reaction
The initial after-hours reaction has been negative, with the stock trading down approximately 6%. The market is clearly weighing the weak near-term guidance for the broader business more heavily than the upward revision for AI accelerators. At a pre-earnings price of $208.89, the valuation baked in high expectations. The disappointing forecast for the core business in the upcoming quarter has given traders a reason to sell first and ask questions later, despite the promising AI narrative.
Key Takeaway
The core investment thesis for AMD remains intact, but it is being tested. The bull case is centered entirely on the company's ability to capture a meaningful share of the AI accelerator market from Nvidia. The raised MI300X guidance confirms this part of the story is not just on track, but accelerating. However, the deterioration in other segments like gaming cannot be ignored and will act as a drag on results in the short term. The key question for investors is whether they can stomach the near-term volatility and cyclical weakness in legacy markets to get exposure to the long-term AI growth story. The data suggests the AI thesis is strong, but the rest of the business is a headwind. For more details, see the latest AMD Analysis.
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