Chip Competition – AMD Against Their Competitors
Progressing through this busy earnings week, a clearer picture is being formulated on one specific technological industry so far: semiconductors. Advanced Micro Devices, more commonly known as AMD, just reported their fourth-quarter earnings that seem to show they have a dominant stance over other competitors. Surprising Wall Street, they posted better-than-expected revenues at $5.6 billion and profits at $0.69 earnings per share. The shocking news comes after their rival, Intel, posted a devastating earnings report that also included weak guidance for the next quarter, hinting at a 40% year-over-year decline. In AMD’s case, they expect a much better, although not great, quarter, estimating revenues at $5.3 billion at a 10% year-over-year decline. They also expect a 50% adjusted gross margin for the first quarter, faring quite well against their competitors.
The state of the chip industry has experienced slowing sales growth following several businesses’ attempts to cut expenses, which could come at the cost of needing more computers and servers, which in turn, affects sales of companies such as AMD and Intel. This new mood in the semiconductor space follows a years-long surge of demand for chips, precisely following a Covid splurge as businesses increased their spending dollars and loosened their budgets. Regardless, in AMD’s case, it seems they have been able to perform better than other competitors, citing the arrival of their newest processor, their growing data center business, and their successful acquisition of specialty chip maker Xilinx. However, this does not make them a clearcut market leader, as their PC chip revenue declined by 51% year-over-year in the fourth quarter. Intel had reduced by 36%, however, their revenues started much higher.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
