AMD (AMD) hovered at around $75 before its earnings report. After the chip giant posted revenue growing by 15.9% Y/Y to $5.6 billion, shares traded at around $88.
What just happened? The company posted growth in its embedded and data center segments. This offset some of its weakness in the client and gaming segment revenue.
For Q1/2023, AMD is forecasting a 10% Y/Y drop in revenue. However, gross margin, albeit on a non-GAAP measure, will hold the 50% level.
The decline and sustained margin are impressive compared to Intel. Intel posted a 28.2% Y/Y revenue decline. Its $10.5 billion to $11.5 billion guidance for the current quarter is nowhere close to the $14.02 billion consensus.
Intel cut pay rates by 10% to 15% for its workers, which will hurt employee morale. CEO Pat Gelsinger will see a base salary cut of 25%.
Intel’s failure to compete with AMD in the cloud market suggests it should have paid the CEO even less.
Risk
AMD’s lower guidance is indicative of a weak market. Fortunately, strong margins suggest that AMD is outselling Intel in the high-end server segment.
AMD stock could attract more buyers. Earlier buyers benefited the most. Look for some profit-taking before accumulating AMD shares.
