AMD, NVIDIA & Intel Are In For A Tough Earnings Season Says Firm

Ramish Zafar

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Chip designers Intel Corporation, NVIDIA Corporation and Advanced Micro Devices, Inc (AMD) are in for a rough earnings season, according to pre-earnings coverage from a financial firm. 2022 was a challenging year for the semiconductor industry as companies all over saw their earnings decimated by a slowing global demand for personal and enterprise computing products. With the first earnings season of 2023 just about to hit the news waves, KeyBanc Capital Markets believes that guidance for the current quarter will be the key metric to watch when it comes to deciphering the current state of the semiconductor industry.

AMD, NVIDIA & Intel Are At Risk Of Sharing Weak Guidance For The Current Quarter

The results that are due later this month for Intel and AMD will showcase their performance for the fourth quarter of last year. They will follow a historic bloodbath for both firms, that saw Wall Street analysts paint Intel's results as 'inexcusable,' and AMD report a massive 40% drop in sales for its client segment but keep its growth story alive as it grew its operating and free cash flow in a quarter where spending had dried up everywhere.

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With the first trading day of the week having settled in, AMD is leading the charge in the semiconductor space, with its shares up by more than 7%. Behind it is NVIDIA, whose shares are up by 5%, while Intel is following the NASDAQ 100 index with a 2% share price appreciation.

Looking at what's in store during the earnings season, Keybanc is taking a muted approach. According to the firm, slow digestion of graphics processing unit (GPU) inventory buildup, continuing weakness in the personal computing industry and a slowdown in cloud computing sales will hamper AMD's earnings for the fourth quarter of 2022 and also cast a dim picture on its guidance for the first quarter.

However, at the same time, Keybanc is also optimistic about AMD's prospects for the second half of this year. The firm believes that the personal computing sector will bottom out by the end of the second quarter, and AMD's Genoa lineup of products will prove crucial for it to steal market share away from larger rival Intel. Keybanc believes that AMD can gain a 30% market share in the data center market - a no small feat - with detailed coverage available here. Subsequently, Team Red's Q4 2022 results can align with estimates alongside lower first-quarter guidance.

Speaking of Intel, both the weaknesses in personal computing and lower cloud computing spending will bleaken its upcoming results and guidance for the first quarter. For Intel, a slowdown in spending by tech giants such as Google, Amazon and Facebook, alongside a slower Chinese cloud sector, will result in a further downturn for Team Blue and a March quarter that follows historical trends.

Finally, NVIDIA, whose RTX 4070 Ti GPU has been performing relatively well given the current inventory problems and a slowdown in consumer spending, might post slightly higher results for its January quarter. However, a Chinese slowdown, this time for gaming products, will also hurt Team Green, as its expectations for a $2.5 billion revenue from its gaming division can further be pushed out to its July quarter. NVIDIA's third quarter of 2023 results were a bloodbath which saw the firm post $1.5 billion in revenue, nearly halving over the year ago quarter. However, these results still beat analyst estimates, which saw the shares rise in aftermarket trading. NVIDIA's guidance for the next quarter will also be lower, but Keybanc believes the firm will pull through 2023 on a strong note as the RTX 40 series ramps up and channel partner inventory clears out.

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