AMD Q4 Net Income Seen Sliding as PC Sales Drop

Chipmaker reports Q4 results on Jan. 31 after a brutal earnings report that sent Intel shares tumbling


Key Takeaways

  • Advanced Micro Devices Inc. (AMD) is expected to report EPS of $0.19 for the fourth quarter, a drop of almost 80% from a year ago.
  • Revenue growth likely fell to its slowest pace since before the pandemic.
  • Analysts will be looking to the chipmaker's data center business, where it is expected to have taken more market share away from rival Intel.

Advanced Micro Devices Inc. (AMD)'s net income probably slid almost 80% in the fourth quarter as revenue growth dropped to its slowest pace in more than three years amid a slowdown in PC sales that likely offset the chipmaker's robust data center business.

AMD is forecast to report earnings of $0.19 per share, a 76% decline from the previous year, according to estimates from Visible Alpha. Revenue growth is expected to slow to 14% year-over-year from 29% in the third quarter, reflecting a second quarter of contraction in the company's PC CPU sales. The declines come even as the company, which reports after markets close on Tuesday, expanded its market share in data centers.

The grim forecast reflects the difficult environment facing the semiconductor industry. Total shipments of PCs fell by almost 30% in the fourth quarter, the largest quarterly decline ever, as consumers reined in spending amid higher prices and a worsening economic outlook.

Weak demand and excess inventory weighed heavily on rival Intel (INTC), whose shares plummeted last week after it forecast a net loss in the first quarter of 2023. Analysts were concerned over AMD's profitability even before Intel's dismal forecast. Bernstein analyst Stacy Rasgon downgraded AMD to market perform from outperform last week, saying the chipmaker had "no margin for error."

AMD shares have fallen 32% in the past year, compared to a 17% decline for the S&P 500 Information Technology sector.

Stock chart comparing AMD performance to S&P 500 IT sector.
Source: TradingView.
AMD Key Stats
Estimate for Q4 FY 2022 Q4 FY 2021 Q4 FY 2020
Adjusted Earnings Per Share ($) 0.19 0.80 1.45
 Revenue ($B)  5.5  4.8  3.2
 Data Center Revenue ($B)  1.7  1.2  0.5

Source: Visible Alpha

Key Metrics

AMD's market share in the data center market has continued to grow steadily. Even with the total revenue decline, data center revenue is expected to rise by 48% to $1.7 billion from $1.2 billion in the fourth quarter of 2021. AMD's new Genoa processor is said to offer greater cloud-computing performance than rival Intel's existing products.

Article Sources
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  1. "PC Sales Plunged by 28% in Q4. The Pandemic Boom is Fading."

  2. Reuters. "Intel's 'historic collapse' erases $8 billion from market value."

  3. Marketwatch. "AMD earnings face even more scrutiny after 'astonishingly bad' Intel outlook."

  4. Visible Alpha. "Financial Data."

  5. "AMD: Leading the Data Center Market."

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