AI Stocks Slide After ER 😅

AMD now models upward of $3.5 billion in 2024 revenue from data-center graphics processing units, which focuson AI applications. That's well above the company's prior forecast, which was for more than $2 billion, but a Susquehanna analyst wrote recently that investors appeared to be targeting $6 billion - or more.

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Shares of AMD fell 6.5% in Tuesday's after-hours trading following the outlook. Through Tuesday's close, the stock had enjoyed a sharp rally of about 80% since the company's prior earnings report. An HSBC analyst wrote ahead of earnings that the stock's surge "raised expectations significantly," notably for the revenue potential of the MI300 AI accelerator family.

AMD forecasts first-quarter revenue of $5.4 billion at the midpoint, while analysts tracked by FactSet had been projecting $5.7 billion. The company expects flat data-center revenue on a sequential basis, "with a seasonal decline in
server sales offset by a strong data-center GPU ramp," according to the company's release.

On the earnings call, Chief Executive Lisa Su emphasized that the company expects sales of data-center GPUs to grow in the first quarter on a sequential basis, whereas the company was once projecting flat performance.

"The key piece of it is, we had originally expected the ramp to be a little more shallow of our MI300X," she said. "What we're seeing now is the supply chain is operating really well, and the customer demand is strong."

AMD is calling for sequential revenue declines in its client, embedded and gaming businesses, noting that semi-custom revenue could fall by "a significant double-digit percentage."

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For the fourth quarter, AMD generated net income of $667 million, or 41 cents cents a share, compared with $21 million, or 1 cent a share, in the year-before period.

On an adjusted basis, AMD earned 77 cents a share, up from the 69 cents a share it reported a year back. That matched the consensus view. Revenue increased to $6.2 billion from $5.6 billion, whereas the FactSet consensus was for $6.1 billion.

AMD's data-center business grew 38% from a year earlier to $2.3 billion, in line with the consensus view. Client revenue increased as well, coming in at $1.5 billion, up 62% from a year ago. That also matched consensus expectations.

The company saw a decline in its gaming revenue, which fell 17% to $1.4 billion but beating the consensus view, which was for $1.2 billion. Embedded revenue was down 24% to $1.1 billion, matching expectations held by analysts.

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