AMD shares climb as server market helps sales forecast

ADVANCED Micro Devices (AMD), the second-largest maker of computer processors, gave a better-than-feared sales forecast for the first quarter as gains in the lucrative server market help make up for a collapse in demand for PC chips.

Revenue will be as much as US$5.6 billion in the period, AMD said in a statement on Tuesday (Jan 31), compared with an average analyst prediction of US$5.56 billion — with estimates coming in as low as US$5 billion. Though a less severe drop than expected, the outlook represents the company’s first year-over-year quarterly sales decline since 2019, ending a growth streak that elevated AMD into the upper ranks of the chip industry.

The shares, which were up 3.7 per cent at the close in New York trading, rose as much as 4.6 per cent in extended trading following the announcement.

AMD has beaten its rival Intel to the market with more capable chips for the machines that run corporate networks and serve as the backbone for cloud-computing data centres. That’s allowed it to take share in a market where spending has held up better than the PC industry.

AMD’s data-centre business posted a sales increase of 42 per cent from a year earlier, with revenue of US$1.7 billion. Sales at the client division, its PC chip unit, dropped 51 per cent to US$903 million.

After two years of struggling to keep up with demand, chipmakers are now struggling with one of the industry’s periodic gluts. Makers of components for computers and smartphones have been among the hardest hit, with those companies seeing sharp declines in sales and profitability.

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Under chief executive officer Lisa Su, AMD has been one of the biggest gainers in the chip industry. And with the company continuing to take market share, it’s not suffering as much as bigger players like Intel.

In the fourth quarter, profit was 69 US cents a share, excluding some items. Revenue gained 16 per cent to US$5.6 billion. Analysts had predicted earnings of 67 US cents and revenue of US$5.52 billion.

The numbers came as a relief to investors following Intel’s report. In the wake of those earnings, some analysts had cut their expectations for AMD. BLOOMBERG