To The Moon

After trading in the United States on May 2, AMD $Advanced Micro Devices(AMD)$ released its quarterly report, and its share price plunged 9.22%.

According to first-quarter data, AMD's overall revenue was $5.353 billion, slightly above the median of $50-5.6 billion guidance and exceeding analysts' consensus expectations of $5.318 billion, but down 9.1% from a year earlier:

Adjusted operating profit of $1.098 billion, slightly beating analysts' expectations of $1.066 billion:

Overall, first-quarter results slightly beat expectations, but in terms of business, revenue from the core data center was $1.295 billion, below analysts' expectations of $1.46 billion. Meanwhile, revenue from the customer business (mainly PC) was $739 million, significantly below analysts' expectations of $908 million:

The data center, once AMD's engine, surprised the market with revenue growth of 42.3% in the fourth quarter last year and 0.2% in the first quarter.

The explanation of the company is mainly due to the macroeconomic impact, corporate spending cuts, related products face destocking pressure.

Customer departments, mainly CPU, accelerated processing units with integrated microprocessors and GPU (APU), and chipsets for desktops and laptops. The revenue of this business is closely related to the PC market.

Before the financial report, IDC announced that PC shipments in the first quarter of this year had dropped 29% compared with the same period last year, and the market expected a sharp decline in the business, but unexpectedly, revenue in the first quarter fell 65.2% year on year, exceeding market expectations.

The main reason for the much larger decline than in the PC market is that AMD controlled shipments to allow for downstream destocking, and the company expects the first quarter to be the bottom of the customer segment.

The game business exceeded market expectations in the first quarter, with revenue of $1.757 billion, down 6.3% from the same period last year and well ahead of market expectations of $1.53 billion, mainly due to the strong demand for high-end game consoles and the year-on-year growth of semi-custom SoC revenue.

Revenue from the embedded business reached $1.56 billion in the first quarter, an increase of 162.5% over the same period last year, a new record. Mainly Xilinx, which was acquired in February last year, fully contributed to the results in the quarter, while a number of terminal demand was strong, and the demand for adaptive computing solutions continued to grow.

Looking ahead to the second quarter, AMD expects overall revenue to be between $50 and $5.6 billion, with a median of $5.3 billion unchanged from the first quarter, and down 19% from the same period last year, exceeding market expectations of 15.9%. The adjusted gross profit margin is expected to be 50%, lower than the market expectation of 50.4%.

In terms of business, AMD expects customer revenue to improve in the second quarter and seasonal growth in the second half of the year. PC shipments are expected to decline by 10% to 260 million units for the whole year. Embedded business growth is expected to slow, mainly due to inventory overstocking.

Data center revenue in the second half is expected to increase by more than 30% compared with the first half, and data centers and embedded business will maintain year-on-year growth for the whole year:

Judging from the first-quarter data and second-quarter results guidance, the situation of AMD is similar to that of other semiconductor companies, which all believe that growth will resume in the second half of 2023.

Therefore, AMD's financial report this quarter is not a big thunder, but the reason for the fierce reaction of the stock price is that before the fundamentals have not really improved, the company's stock price has soared 65% from the bottom, superimposed by the Fed's interest rate meeting, and the big drop is more like taking a break and then continuing to rush!