10 months ago • 2 mins
AMD reported unexpectedly strong quarterly results this week, sidestepping the slumping PC industry.
What does this mean?
Looks like someone threw the chip market into reverse. After struggling to keep up with unbridled orders for over two years, chipmakers have found themselves facing a sudden supply glut. But AMD had an ace up its sleeve, beating competitors like Intel in the high-stakes race to get the advanced chips used in cloud data centers and corporate networks to market. AMD, then, has managed to nab a bigger share of a market where spending is holding up relatively well: the firm’s data center segment reported that sales were up 42% from the year before, enough to balance out a 51% fall in AMD’s PC business. That could be why revenue and profit came in ahead of expectations, and why investors sent shares up despite the firm admitting that this quarter's sales could drop 10% from the same time last year.
Why should I care?
Zooming in: What’s yours is mine.
AMD’s results were a welcome relief for investors: Intel delivered a tale of woes last week, and the gap between the two firms could point to the way the pie’s being divided in the chip world. After all, stealing market share from its flailing rival is playing out well for AMD, helping it weather the economic storm until things are predicted to pick up. And there’s plenty more to loot: sure, Intel might not hold 90% of the PC and server markets like it did in 2017, but the 70% it currently controls is still sizable by anyone’s standards.
For markets: Watch this space.
Analysts think chip companies’ profits will fall 21% this year, but AMD’s prospects have got them thinking that it might be one of the few firms capable of escaping that destiny and making more money in 2023. That might be why analysts expect AMD’s stock price to outpace Intel and Nvidia with a 19% jump this year.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.
/3 • Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.