After it beat analyst revenue estimates yesterday, chipmaker Advanced Micro Devices, Inc (AMD) can see growth slowdown this year, according to research and financial firms. AMD's earnings saw the firm post $5.6 billion in revenue for the fourth quarter, marking a small 1% annual growth. This let the firm beat analyst estimates by $80 million, with its earnings per share of $0.69 also hoping the estimates by two cents. At the earnings conference for the report, AMD's chief Dr. Lis Su explained that growth in her cmpany's embedded and data center segments led it to increase the fourth quarter revenue by 16% annually, with the pair accounting for 50% of AMD's overall revenue during the quarter.
AMD Confident About Growing Data Center Sales This Year Through New Products
Heading into the earnings result, analysts speculated that AMD's data center segment would perform well this year, as new product launches place the firm in an advantageous position with respect to its larger rival Intel. This turned out to be true for the previous quarter as well, as data center was the only division that delivered organic revenue growth for AMD.
Other segments, such as client computing and gaming, saw 51% and 7% annual drops, and while the revenue from embedded computing grew, AMD explained that this 1,868% growth had come on the back of its massive Xilinx acquisition. AMD absorbed more costs of the deal during its fourth quarter, which saw the firm post a $149 million GAAP operating loss and a massive 99% net income drop.
AMD's chief, Dr. Lisa Su, shared that sales to North American hyper scalers in the cloud computing segment more than doubled annually, especially as AMD-based instances became more common from leading vendors such as Amazon and Microsoft.
Dr. Su added that her company continued to manage inventory during the fourth quarter, as it shipped fewer units than were being consumed in the personal computing industry. This stands in sharp contrast to Intel, which is shipping more units to maximize product visibility, according to Bernstein. AMD's client segment, which covers PC sales, was its worst performing segment during the quarter, as it saw a massive 51% annual revenue drop. Commenting on the gaming division, the executive explained that revenue dropped as AMD slowed down shipments, but channel sales of the newer Radeon RX graphics processing units (GPUs) were higher over the previous quarter.
Commenting on AMD's earnings results, research firm Summit Insights states that AMD's outlook for the first quarter is hinting at a slowdown in its loud computing personal computing and gaming markets. It believes that the firm's financial performance, which saw AMD grow its calendar and fiscal year 2022 net income by another whopping 60%, will tone down this year. As opposed to others, such as KeyBanc, which believes that AMD will close the year with a 30% data center market share, Summit Insights believes that AMD's market share gains will be "less meaningful" in 2023.
On the other hand, research firm Jefferies is more upbeat about AMD. It is enthused by AMD's belief that both the data center and the personal computing markets can bottom out by the end of the current quarter. AMD plans to ship fewer products than are being consumed this quarter as well, as the firm aggressively targets inventory buildup at retailers. Like Intel, AMD also did not provide a full year guidance at its earnings call, explaining that macroeconomic uncertainty had influenced the decision.
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