1. AMD's third-quarter financial report shows that although the company's third-quarter revenue and profit performance met analyst expectations, its outlook for the fourth quarter fell short of expectations, which disappointed the market. 2. AMD's stock price fell more than 7% after hours, while US chip stocks were generally affected after hours.
Finance Link News, October 30th (Editor: Liu Rui) After Tuesday's post-market trading in the Eastern Time, AMD's stock price fell more than 7% after hours. Prior to this, the company's third-quarter financial report showed that although the company's third-quarter revenue and profit performance met analysts' expectations, its outlook for the fourth quarter fell short of expectations, which left the market somewhat disappointed.
AMD's stock price plunged after hours.
AMD announces bleak outlook.
According to FactSet's data, AMD's earnings per share in the third quarter of 2024 were $0.92, in line with analysts' expectations; revenue was $6.8 billion, a 17% year-on-year increase compared to the same period last year's $5.8 billion, slightly higher than analysts' expected $6.7 billion.
Looking ahead, AMD expects its revenue for the fourth quarter to be around $7.5 billion (up or down $0.3 billion), slightly below the average analyst estimate of $7.55 billion. AMD predicts an adjusted gross margin of around 54%, in line with analyst expectations.
Even though AMD has raised its forecast for artificial intelligence chip sales in the datacenter business segment in 2025 from the previous $4.5 billion to $5 billion, this is still not enough to impress investors.
Summit Insights analyst Kinngai Chan said, "Obviously, the outlook for AMD in the (fourth quarter) is not good enough for investors."
AMD's stock price fell over 7% in after-hours trading, wiping out most of the accumulated 8% gain over the past three trading days. At the same time, U.S. chip stocks were generally affected after hours. As of the time of publication, Arm Holdings fell 1.7% after hours, Nvidia fell 0.3%, Intel fell 0.4%. Chip equipment manufacturer Lam Research dropped 0.8%.
Running Point Capital's Chief Investment Officer Schulman (Michael Schulman) said, "Once most investors digest AMD's good performance and its somewhat dim forecasts, they will try to infer what this means for other AI chips and semiconductor markets."
Still no narrowing of the gap with Nvidia.
AMD's revenue growth is mainly due to record datacenter business income (including AI chips). In the third quarter of this year, AMD's datacenter business income soared 122% to reach $3.5 billion.
Since the beginning of 2023, AMD's stock price has more than doubled to around $166 due to increased market demand for AI chips and processors.
The growth potential of AMD's stock price largely comes from market expectations for its outlook – many analysts position it as a competitor to Nvidia.
However, from recent performance, AMD seems to have not yet shown enough competitiveness. Analysts at Bernstein bluntly stated before the financial report was released: "The recently released next-generation products do not seem to significantly narrow the gap with Nvidia."
Earlier this month, AMD held the "Advancing AI" event, releasing a new generation of ai chips, but did not announce any new major clients.
Currently, AMD's largest customers include Microsoft, Google, and Meta. These tech giants have been using AMD's ai chips in their cloud computing and ai models since 2023 as a "cost-effective alternative" to Nvidia chips.
However, Nvidia remains the undisputed leader in the ai chip sector. It is reported that the annual sales of the ai chip market could reach $400 billion in the next five years, with Nvidia currently holding a market share of around 70% to 95%.
During the financial report conference call with analysts, AMD CEO Su Zifeng also discussed the expansion of Microsoft and Meta's use of the company's ai chips.
However, analysts generally believe that Nvidia will continue to maintain its major market share in the foreseeable future, partly due to its entire ai ecosystem including CUDA software and network devices.
