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AMD Stock Surges 9% on Upbeat Q3 Earnings: ETFs to Benefit
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Chipmaker Advanced Micro Devices (AMD - Free Report) reported third-quarter 2023 non-GAAP earnings of 70 cents per share, beating the Zacks Consensus Estimate by 2.94% and climbing 4.5% year over year. Revenues of $5.8 billion beat the Zacks Consensus Estimate by 1.65% and increased 4.2% year over year. However, the guidance was unimpressive. The company expects weakness in the Gaming and Embedded segment to hurt revenues in the current quarter.
Data Center revenues declined 0.7% year over year to $1.6 billion and accounted for 27.6% of total revenues. Sequentially, revenues increased 21%, driven by strong adoption of fourth-generation AMD EPYC CPUs. Our model estimate for third-quarter Data Center revenues was pegged at $1.62 billion.
The Client segment revenues increased 42.2% year over year to $1.46 billion and accounted for 25.1% of total revenues. Higher Ryzen mobile processor sales drove top-line growth. Our model estimate for third-quarter Client revenues was pegged at $1.24 billion.
The Gaming segment revenues decreased 7.7% year over year to $1.51 billion and accounted for 26% of total revenues. The decline was primarily attributed to lower semi-custom revenues. Our model estimate for third-quarter Gaming revenues was pegged at $1.61 billion.
The Embedded segment revenues were $1.24 billion, down 4.6% year over year. The segment accounted for 21.4% of total revenues. The top line suffered from lower performance in the communications market. Our model estimate for third-quarter Embedded revenues was pegged at $1.23 billion.
Guidance
AMD expects fourth-quarter 2023 revenues to be $6.1 billion (+/-$300 million), which indicates year-over-year growth of 9% and 5% sequentially at the mid-point.
It expects to witness year-over-year growth in the Data Center and Client segments by double-digit percentage. The Gaming segment is expected to decline due to the matured console cycle. Softness in the embedded market will likely hurt Embedded revenues.
Sequentially, Data Center segment revenues are expected to grow on a double-digit percentage, while Client is expected to increase. However, Gaming and Embedded segment revenues are expected to decline by a double-digit percentage.
Against this backdrop, investors can bet on AMD stock. Those who are worried about weak guidance for Q4, may opt for the ETF route. There are a few ETFs that are heavy on Advanced Micro Devices stock. These AMD-heavy ETFs minimize the company-specific risks and offer better exposure to the broader industry.
Simplify Volt RoboCar Disruption and Tech ETF (VCAR - Free Report) – 10.80% Weight in AMD
AOT Growth and Innovation ETF (AOTG - Free Report) – 8.64% Weight in AMD
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AMD Stock Surges 9% on Upbeat Q3 Earnings: ETFs to Benefit
Chipmaker Advanced Micro Devices (AMD - Free Report) reported third-quarter 2023 non-GAAP earnings of 70 cents per share, beating the Zacks Consensus Estimate by 2.94% and climbing 4.5% year over year. Revenues of $5.8 billion beat the Zacks Consensus Estimate by 1.65% and increased 4.2% year over year. However, the guidance was unimpressive. The company expects weakness in the Gaming and Embedded segment to hurt revenues in the current quarter.
Data Center revenues declined 0.7% year over year to $1.6 billion and accounted for 27.6% of total revenues. Sequentially, revenues increased 21%, driven by strong adoption of fourth-generation AMD EPYC CPUs. Our model estimate for third-quarter Data Center revenues was pegged at $1.62 billion.
The Client segment revenues increased 42.2% year over year to $1.46 billion and accounted for 25.1% of total revenues. Higher Ryzen mobile processor sales drove top-line growth. Our model estimate for third-quarter Client revenues was pegged at $1.24 billion.
The Gaming segment revenues decreased 7.7% year over year to $1.51 billion and accounted for 26% of total revenues. The decline was primarily attributed to lower semi-custom revenues. Our model estimate for third-quarter Gaming revenues was pegged at $1.61 billion.
The Embedded segment revenues were $1.24 billion, down 4.6% year over year. The segment accounted for 21.4% of total revenues. The top line suffered from lower performance in the communications market. Our model estimate for third-quarter Embedded revenues was pegged at $1.23 billion.
Guidance
AMD expects fourth-quarter 2023 revenues to be $6.1 billion (+/-$300 million), which indicates year-over-year growth of 9% and 5% sequentially at the mid-point.
It expects to witness year-over-year growth in the Data Center and Client segments by double-digit percentage. The Gaming segment is expected to decline due to the matured console cycle. Softness in the embedded market will likely hurt Embedded revenues.
Sequentially, Data Center segment revenues are expected to grow on a double-digit percentage, while Client is expected to increase. However, Gaming and Embedded segment revenues are expected to decline by a double-digit percentage.
ETFs to Benefit
The stock jumped more than 9.6% on Nov 1, 2023 on 2.45 times elevated volume. The stock currently has a Zacks Rank #3 (Hold). Based on short-term price targets offered by 28 analysts, the average price target for Advanced Micro Devices comes to $139.00. The forecasts range from a low of $80.00 to a high of $200.00. The average price target represents an increase of 41.12% from the last closing price of $98.50.
Against this backdrop, investors can bet on AMD stock. Those who are worried about weak guidance for Q4, may opt for the ETF route. There are a few ETFs that are heavy on Advanced Micro Devices stock. These AMD-heavy ETFs minimize the company-specific risks and offer better exposure to the broader industry.
Simplify Volt RoboCar Disruption and Tech ETF (VCAR - Free Report) – 10.80% Weight in AMD
AOT Growth and Innovation ETF (AOTG - Free Report) – 8.64% Weight in AMD
iShares Semiconductor ETF (SOXX - Free Report) – 8.55% Weight in AMD
Invesco PHLX Semiconductor ETF (SOXQ - Free Report) – 8.50% Weight in AMD
Spear Alpha ETF (SPRX - Free Report) – 8.10% Weight in AMD
AXS Esoterica NextG Economy ETF (WUGI - Free Report) – 7.87% Weight in AMD