Earnings Outlook: AMD earnings: With batch during top prices in some-more than a decade, opinion contingency be strong

Advanced Micro Devices Inc. batch is trade for some-more than it has in over a decade, though a rest of a year is still a doubt symbol for a chip builder amid problems in a zone that has showed churned signs of alleviation while traffic with tariff troubles and diseased data-center sales.


AMD, -1.59%

 is scheduled to news second-quarter gain on Tuesday. The Santa Clara, Calif.-based chip maker’s formula follow stronger-than-expected gain from Intel Corp.

INTC, +1.78%

 and Texas Instruments Inc.

TXN, +1.42%

 as PC sales in a June-ended entertain saw a boost. Intel’s gain perceived a important advantage from those aloft PC sales, though that didn’t interpret into postulated batch gains for a chip giant.

More: Intel’s gain kick gets sincerely cold accepting from analysts, investors

Mizuho researcher Vijay Rakesh pronounced AMD competence see a softer-than-expected second half of a year. Rakesh also recently lifted his cost aim on a batch to $37 from $33, though downgraded AMD to neutral from a buy rating given a stock’s some-more than 80% run-up on a year. Additionally, AMD shares strike a shutting high of $34.39 on Jul 15, their top tighten given May 19, 2006, when shares finished during $34.95, according to FactSet data.

“While we have remarkable altogether server supply bondage saying reduction dislocation from tariffs with most of a relocation done, we trust 2H hyperscale/data core spending competence not see a large 20-30% miscarry from a debility in 1H19 which, total with slower PCs and rival INTC pricing, could extent 2H upside,” Rakesh said.

What to expect

Earnings: Of a 28 analysts surveyed by FactSet, AMD on normal is approaching to post practiced gain of 8 cents a share, down from a 9 cents a share approaching during a commencement of a quarter. Estimize, a program height that uses crowdsourcing from hedge-fund executives, brokerages, buy-side analysts and others, calls for gain of 9 cents a share.

Revenue: Wall Street expects income of $1.53 billion from AMD, according to 27 analysts polled by FactSet. AMD likely income of $1.47 billion to $1.57 billion. Estimize expects income of $1.54 billion.

Stock movement: AMD shares are adult 23% given a association final reported earnings. In comparison, a SP 500 index

SPX, -0.16%

 has gained 2.7%, a tech-heavy Nasdaq Composite Index

COMP, -0.44%

 has modernized 2.9%, and a PHLX Semiconductor Index

SOX, +0.26%

 has gained 2.4% in that time.

Of a 34 analysts who cover AMD, 13 have buy or overweight ratings, 17 have reason ratings and 4 have sell or underweight ratings, with an normal cost aim of $30.62, or 10% reduce than Friday’s shutting cost of $33.98.

What to demeanour for in a call

At a commencement of a year, AMD was forecasting a improved year than other chip makers, though service to a beleaguered chip zone competence be entrance progressing than approaching as investigate firms Gartner and IDC reported a arise in tellurian PC shipments for a second quarter.

For more: Rush to kick China tariffs drives PC shipments higher, though that competence bode ill for rest of 2019

Cowen researcher Matthew Ramsay, who has an outperform rating and lifted his cost aim to $40 from $36 recently, pronounced investors are gentle with a second half entrance in a small light.

“Despite mixed 7nm product launches, we acknowledge medium risk to 2H19 expectations given a soothing macro and slower liberation of hyperscale collateral spending,” Ramsay said. “However, a conversations prove investors would be excellent if 2019 expansion superintendence changed somewhat reduce to ~5% contra stream superintendence of high-single digits given a macro, so still implying 30% Y/Y expansion in 2H19.”

In chip parlance, nanometers, or nm, refers to a distance of a transistors that go on a mechanism chip, with a ubiquitous order being that smaller transistors are faster and some-more fit in regulating power. AMD launched a Ryzen desktop CPUs and APUs as good as new Navi GPUs recently, and those sales will figure in a third-quarter outlook.

Tech gain preview: A exam amid scattered times, and all a chips are on a table

“Although we consider there sojourn risks for a PC markets (and other electronic finish markets), we trust that these latest estimates simulate definitely on Intel and AMD,” Instinet researcher David Wong, who has buy ratings on both AMD and Intel, wrote in a new note. “In addition, we expect that new products from Intel and AMD could good yield some additional impulse for a PC and server finish markets in a second half of this year.”

Susquehanna Financial Group researcher Christopher Rolland, who has neutral ratings on both AMD and Intel, pronounced AMD had already gained share forward of a new product launches.

“AMD launched a initial Ryzen 7nm CPUs on Jul 7, though already has achieved desktop share of 19.1% in 2Q19 (highest share in 5+ years),” Rolland said. “To fight these share gains, we have listened (our new Asia trip) that Intel is charity cost cuts of adult to 15% on a Coffee Lake CPUs.”

Also, AMD announced a cost cut to a Radeon 5700 array graphics label only days after

NVDA, -0.14%

 announced a line of competing cards in a arms competition between a dual companies.

Wallace Witkowski is a MarketWatch news editor in San Francisco. Follow him on Twitter @wmwitkowski.

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