AMD Net Income Could Plunge 83% On Weak Semiconductor Sales, Faltering Data Center Revenue

AMD Lisa Su

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Advanced Micro Devices Inc. (AMD), among the top seven semiconductor makers by market value, will likely say that first quarter net income plunged by more than 83% as revenue declined for the first time in four years, amid an ongoing global slump in chip sales.

Key Takeaways

  • AMD is expected to report adjusted EPS for Q1 2023 of $0.08 vs. $0.56 in the prior-year quarter.
  • Revenue could fall year-over-year for the first time in four years.
  • Semiconductor sales have plunged industry-wide, and AMD's data center revenue is projected to grow at a slower pace than recent quarters.

AMD probably generated net income of about $137 million, down from $786 million a year earlier, according to analysts' estimates compiled by Visible Alpha. Adjusted earnings per share (EPS) is projected to plunge to $0.08 from $0.56 in the prior-year quarter. The semiconductor maker could say revenue was $5.3 billion, down almost 10% from $5.9 billion at this time last year.

In its fourth-quarter earnings report, AMD reported $21 million in net income, a 98% decline compared to the prior-year quarter. The company also projected that a 10% revenue fall for the first quarter was likely. AMD reports fiscal results on May 2 after market close.

Dire analyst predictions underscore the significant headwinds plaguing the semiconductor space in recent months, as inflation and interest rate hikes combined with dwindling sales to hurt companies across the industry. The Semiconductor Industry Association said that industry-wide sales fell almost 21% year-over-year for the month of February, the sixth consecutive month of declines. Global shipments of PCs, a major driver of semiconductor sales, fell by a third in the first quarter.

AMD shares are up by less than 1 percent in the last year, compared with a 5% gain for the S&P 500 Information Technology Index during the same period.

One-Year Total Return for S&P 500 Information Technology Index and AMD
Source: TradingView.
AMD Key Stats
  Estimate for Q1 FY 2023 Actual for Q1 FY 2022 Actual for Q1 FY 2021
Adjusted Earnings Per Share ($) 0.08 0.56 0.45
Revenue ($B) 5.3 5.9 3.4
Data Center Revenue ($B) 1.5 1.3 0.6

Source: Visible Alpha

The Key Metric: Data Center Revenue

AMD's top-line performance could also be hurt by weakening revenue for its data centers. The company's data center revenue for the first quarter is expected to grow by 14% to $1.5 billion. This is the slowest pace of growth in this area in at least three years.

Article Sources
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  1. Visible Alpha. "Financial Data."

  2. "Largest semiconductor companies by market cap."

  3. AMD. "AMD Financial Results."

  4. Advanced Micro Devices Inc. "AMD to Report Fiscal First Quarter 2023 Financial Results."

  5. Semiconductor Industry Association. "Global Semiconductor Sales Decrease 4% Month-to-Month in February."

  6. TechCrunch. "Global PC shipments dropped by a third in Q1."

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