Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD), the US chipmaker in the unenviable position of competing with Nvidia Corp, beat its first-quarter revenue guidance by $100 million, with top-line sales coming in at $5.5 billion.
But this was a disappointing result, if the market’s reaction is anything to go by- AMD shares traded over 6% lower in Wednesday’s pre-market exchanges.
Although gaming revenues plummeted by nearly 50% year on year due to lower Radeon GPU sales, record quarterly sales in the data center segment more than made up for this.
AMD’s second-quarter guidance of revenues in the range of $5.4 billion to $6 billion, representing year-over-year growth of 6% at the midpoint of $5.7 billion, was slightly below the Wall Street consensus of $5.72 billion.
But, as Wedbush pointed out, “investors were missing the forest for the trees as the raised guide should have been viewed as AMD solidifying its position as the primary alternative to Nvidia in the AI accelerator market”.
Chief executive Lisa Su told analysts that AMD expects MI300 AI accelerator chip sales of around $4 billion in 2024. This marks an increase of $500 million from its prior estimate for the year.
"Overall AI demand has exceeded anyone's expectations in 2024," Su said in the conference call.
Still, the market wasn’t impressed, despite, as Wedbush stated, “AMD's increased forecast and strong apparent Q1 growth in accelerator sales again highlighting AMD's solid positioning in the AI space”.
AMD may be suffering from an ‘Nvidia discount’, i.e. despite an optimistic outlook, it’s still not the AI titan that is its bigger competitor.
For Wedbush, this represents nothing but a buying opportunity. Analysts gave the stock an outperform rating with a $200 price target against a pre-market price of $148.2.