When Advanced Micro Devices (AMD) cut its revenue guidance for the third quarter, few investors
expected it. AMD stock dropped by 13.9% on Oct. 9, 2022. What happened?
AMD expects revenue of around $5.6 billion, down from $6.71 billion. The CPU supplier said that the PC
market remains weak. The industry is still adjusting to the post-pandemic demand for computers.
Corporations already refreshed their desktop systems during the pandemic. Amid the upcoming
recession, they do not need to spend more on hardware.
AMD cited an inventory correction is underway. Despite launching incredibly good Ryzen chips,
customers have no plans to upgrade. The latest 7950X CPU requires more power and runs at hotter
temperatures. For example, AMD set 95 degrees Celsius as an acceptable working temperature. Before
that, PC enthusiasts invested in chip cooling solutions to achieve lower heat.
AMD advised system builders to run on eco mode or lower the power levels. This lowers performance. It
also undermines the reason to upgrade in the first place as consumers pay launch day prices.
The industry did not mention the Ethereum merge as a reason for the sales shortfall. Ethereum ended
mining, which hurt AMD and Nvidia (NVDA) graphic chip sales. Investors may buy GPUs at a discount
from here. This will weaken AMD’s near-term sales.
