AMD stock drops 13% after Q3 earnings report, but exceeds expectations with strong AI demand

From Nasdaq: 2024-11-04 20:52:05

Advanced Micro Devices stock dropped 13% after Q3 earnings report, with Q4 guidance slightly below expectations. Despite this, AMD exceeded earnings and revenue expectations, led by strong AI chip demand. Data center sales surged to $3.5 billion. AMD raised GPU sales outlook to over $5 billion for 2024. AMD has shown resilience despite recent volatility, outperforming the S&P 500. The Trefis High Quality Portfolio has been less volatile and consistently outperformed the index. AMD continues to benefit from generative AI trend, pivoting to chips for AI workloads. AMD unveiled new MI325X and MI350 chips to compete with Nvidia in the AI-GPU space. Inference performance and multimodal AI capabilities position AMD well for growth. Oracle chose AMD chips for AI supercluster, recognizing AMD’s competitive pricing and strong performance. Nvidia remains a strong player in the AI market with substantial growth this year. AMD’s adjusted gross margins have improved to 53%, driven by economies of scale and product mix favoring data center products. Margins are expected to reach 55% as GPU sales increase. AMD trades at 46x consensus 2024 earnings, justified by PC market recovery and AI demand. Monetary easing by the Fed could benefit AMD through lower interest rates and increased capital spending in data centers. AMD stock is valued at $160 per share, 10% above the current market price.



Read more at Nasdaq: Guidance Misses, But AMD Delivers Where It Counts