(Bloomberg) – Advanced Micro Devices Inc., the second-largest maker of computer processors, gave a subdued sales outlook for the current fiscal year, weighed down by weak demand for chips used in video game hardware.
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The company said in a statement Tuesday that second-quarter sales will be approximately $5.7 billion. This compares with the average analyst estimate of $5.72 billion.
Revenue from AMD's gaming division was significantly lower than expected last quarter, but the company gets a boost from its work on AI accelerators, Nvidia Corp.-style chips that help develop chatbots and other artificial intelligence tools. I hope so. The company predicts its new MI300 products will generate up to $3.5 billion in revenue this year.
“This is a very exciting time for our industry, with widespread adoption of AI driving demand for more computing across a wide range of markets,” Chief Executive Lisa Su said in a statement.
AMD stock fell as much as 6.5% after closing at $158.38 in pre-market trading on Wednesday. The stock has gained about 7.4% this year through Tuesday.
AMD's report follows a downbeat forecast from Intel last week, which said it expects demand to remain weak in the first half of this year. However, AMD still expects growth to be in the 6% range this quarter, better than the roughly flat expectations of its larger rivals.
First-quarter earnings, excluding certain items, were 62 cents per share on revenue of $5.47 billion. This performance compares with estimated earnings of 61 cents and revenue of $5.45 billion.
AMD's PC chip division had revenue of about $1.4 billion, compared to an estimated $1.29 billion. Data center sales were $2.3 billion, in line with average expectations. Meanwhile, gaming computer-related revenue was $922 million. Analysts had expected sales of $965.5 million.
Like Intel, AMD still derives most of its revenue from personal computers and server microprocessors. The once-strong server market has recently become less reliable as data center operators put more of their budgets into his Nvidia chips, but that's exactly where AMD is making its own efforts. It is.
Investors betting on AMD's AI prospects started the stock rally earlier this year, but the stock has cooled in recent months. The announcement of next-generation NVIDIA chips weighed on stock prices.
AMD also competes with Nvidia in the market for graphics processors that improve video game images. It is Intel's biggest rival in both server and PC processors, as well as in programmable logic chips that can be reconfigured with software after installation. We also supply key components for game consoles to Microsoft and Sony.
AMD said its gross profit margin (the percentage remaining after production costs are deducted from sales) for the second quarter would be approximately 53%, which was in line with expectations.
(Updates with pre-market shares in fifth paragraph.)
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