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AMD (NASDAQ:AMD) Posts Higher-Than-Anticipated Gross sales In Q3 However Quarterly Steering Underwhelms
Pc processor maker AMD (NASDAQ:AMD) reported Q3 FY2023 outcomes beating Wall Road analysts’ expectations, with income up 4.22% yr on yr to $5.8 billion. Nonetheless, subsequent quarter’s income steering of $6.1 billion was much less spectacular, coming in 4.53% beneath analysts’ estimates. Turning to EPS, AMD made a non-GAAP revenue of $0.70 per share, bettering from its revenue of $0.67 per share in the identical quarter final yr.
Is now the time to purchase AMD? Discover out by studying the unique article on StockStory.
AMD (AMD) Q3 FY2023 Highlights:
Income: $5.8 billion vs analyst estimates of $5.69 billion (1.87% beat)
EPS (non-GAAP): $0.70 vs analyst estimates of $0.68 (3.59% beat)
Income Steering for This fall 2023 is $6.1 billion on the midpoint, beneath analyst estimates of $6.39 billion
Free Money Circulate of $297 million, up 16.9% from the earlier quarter
Stock Days Excellent: 142, down from 154 within the earlier quarter
Gross Margin (GAAP): 51%, up from 49.7% in the identical quarter final yr
“We delivered robust income and earnings progress pushed by demand for our Ryzen 7000 sequence PC processors and file server processor gross sales,” mentioned AMD Chair and CEO Dr. Lisa Su.
Based in 1969 by a gaggle of former Fairchild semiconductor executives led by Jerry Sanders, Superior Micro Units or NASDAQ: (NASDAQ:AMD) is among the main designers of laptop processors and graphics chips utilized in PCs and knowledge facilities.
Processors and Graphics ChipsThe greatest demand drivers for processors (CPUs) and graphics chips in the mean time are secular traits associated to 5G and Web of Issues, autonomous driving, and excessive efficiency computing within the knowledge middle house, particularly round AI and machine studying. Like all semiconductor firms, digital chip makers exhibit a level of cyclicality, pushed by provide and demand imbalances and publicity to PC and Smartphone product cycles.
Gross sales GrowthAMD’s income progress during the last three years has been spectacular, averaging 42.5% yearly. However as you possibly can see beneath, this quarter wasn’t significantly robust, with income rising from $5.57 billion in the identical quarter final yr to $5.8 billion. Semiconductors are a cyclical trade, and long-term buyers ought to be ready for durations of excessive progress adopted by durations of income contractions (which might typically provide opportune instances to purchase).
Whereas AMD beat analysts’ income estimates, this was a sluggish quarter for the corporate as its income solely grew 4.22% yr on yr. AMD’s progress, nonetheless, flipped from unfavorable to optimistic this quarter. This encouraging signal will seemingly be welcomed by shareholders.
AMD returned to optimistic income progress this quarter and its administration staff expects the pattern to proceed. The corporate is guiding to eight.95% year-on-year progress subsequent quarter, and analysts appear to agree, forecasting 18.9% progress over the following 12 months.
Product Demand & Excellent InventoryDays Stock Excellent (DIO) is a vital metric for chipmakers, because it displays a enterprise’ capital depth and the cyclical nature of semiconductor provide and demand. In a good provide surroundings, inventories are usually secure, permitting chipmakers to exert pricing energy. Steadily growing DIO generally is a warning signal that demand is weak, and if inventories proceed to rise, the corporate might must downsize manufacturing.
This quarter, AMD’s DIO got here in at 142, which is 44 days above its five-year common. These numbers recommend that regardless of the current lower, the corporate’s stock ranges are increased than what we have seen up to now.
Key Takeaways from AMD’s Q3 Outcomes Sporting a market capitalization of $155 billion, greater than $5.79 billion in money readily available, and optimistic free money stream during the last 12 months, we consider that AMD is attractively positioned to put money into progress.
It was nice to see a fabric enchancment in AMD’s stock ranges. We had been additionally excited its income and EPS outperformed Wall Road’s estimates, pushed by robust gross sales for its Ryzen CPU chips which might be utilized in desktop PCs. However, its income steering for subsequent quarter underwhelmed. Zooming out, we have noticed broader weak point within the semiconductor trade as increased rates of interest have resulted in decrease client buying energy and company capital expenditure budgets. We nonetheless suppose this was a good, albeit blended, quarter, displaying that the corporate is staying on observe. Buyers had been seemingly spooked by the corporate’s outlook, and the inventory is down 4.51% after reporting. AMD at present trades at $94.07 per share.
The writer has no place in any of the shares talked about on this report.
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