May 2 (Reuters) - Shares of Advanced Micro Devices (AMD) fell on Tuesday after a second-quarter forecast missed Wall Street expectations, overshadowing optimism from company executives that the battered chip market will start to recover in the second half of 2023.
AMD shares fell 6.4% in extended trading after the company announced first-quarter sales that missed analyst estimates for PC and data center chips, its two largest segments.
Executives at AMD rival Intel Corp last week told investors they expected the PC market to start rebounding in the second half, raising Intel's margins with it. Those remarks had spurred hopes that AMD's PC business might also show signs of recovery, but the company's results showed demand remains down.
"AMD results were more vulnerable than Intel's because most AMD-based PC customers were consumers. In contrast, Intel had a significant share in the business PC segment," said Mikako Kitagawa, analyst at research firm Gartner. "The results reflect a weaker consumer PC segment than the business PC segment."
Su told investors on a conference call that the company expects better sales in the second half of the year in both the PC segment and in data centers.
"We remain confident in our ability to grow in the second half of the year," she said.
Part of that growth will come from a chip called the MI300, which will compete with Nvidia Corp's flagship chips for artificial intelligence. Su said customer interest in that chip is growing. It will start shipping later this year.
"We do believe that we will start ramping revenue in the fourth quarter with Cloud AI customers, and then it'll be more meaningful in 2024," Su said.
But in the meantime, the company is still grappling with a depressed PC market. Dean McCarron, head of chip market tracking firm Mercury Research, said both AMD and Intel are selling fewer chips to PC makers, hoping those customers will burn off a glut of chips on their shelves.
"The main take-away here is that Q1 revenues from both Intel and AMD do not reflect the market, and you can't make any accurate judgments about which way either company is headed," McCarron said.
AMD forecast current-quarter revenue of about $5.3 billion, plus or minus $300 million. Analysts polled by Refinitiv were expecting revenue of $5.48 billion.
Revenue in the quarter ended April 1 came in at $5.35 billion, compared to estimates of $5.30 billion.
Revenue from AMD’s client segment, which includes personal computers, fell 65% to $739 million in the first quarter.
Data center segment revenue was flat at $1.30 billion during the quarter.