Key points:
- AMD released preliminary Q3 results on Thursday evening
- Revenue is expected to be more than $1 billion below its previous forecast
- AMD shares are down over 6% premarket
Advanced Micro Devices (NASDAQ: AMD) reported preliminary third-quarter results on Friday, which saw the semiconductor company reveal lower-than-expected revenue due to reduced processor shipments.
AMD shares declined over 6% premarket.
The chipmaker said it anticipates revenue to be approximately $5.6 billion, an increase of 29% year-over-year. However, the company previously expected revenue to be around $6.7 billion, or a 55% increase year-over-year.
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The forecast decline in revenue was attributed to lower-than-anticipated Client Segment revenue resulting from reduced processor shipments due to a weaker PC market. However, revenue in the Data Center, Gaming and Embedded segments increased year-over-year.
Furthermore, AMD also said its non-GAAP gross margin is expected to come in around 50%, while previously forecasting gross margin to be closer to 54%.
“The PC market weakened significantly in the quarter,” said AMD Chair and CEO Dr. Lisa Su.
“While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain,” added Su.
Chipmakers have been impacted by lower spending on PCs as individuals return to work and school. Meanwhile, the PC market has been further hit by Covid pressures in China, and the supply chain has worsened due to the Ukraine crisis.
Earlier this week, Wells Fargo analyst Aaron Rakers cut his price target on the stock to $90 from $130 per share, maintaining an Overweight rating, telling investors the firm is surprised by the lack of inbound investor interest in AMD at its current levels and feels it “remains well-positioned as a market share gainer w/ continued product roadmap execution.”