AMD Missed Its Q4 Revenues, Stock Rose Due to 2019 Outlook

Advanced Micro Devices’ Q4 results

On January 29, Advanced Micro Devices (AMD) reported its fourth-quarter results after the market bell. The company met the earnings estimates. However, Advanced Micro Devices’ revenues didn’t meet analysts’ expectations. Despite sluggish fourth-quarter revenue results, Advanced Micro Devices stock rose ~20% on January 30. The company has a strong fiscal outlook and expects growth momentum in the second half of the year.

AMD Missed Its Q4 Revenues, Stock Rose Due to 2019 Outlook

Earnings and revenues

Advanced Micro Devices delivered an EPS of $0.08 in the fourth quarter, which was in line with the estimates. The earnings rose significantly from the EPS of $0.01 in the same quarter the previous year. The earnings were driven by higher revenues and improved margins. The company’s revenues of $1.42 billion were behind the consensus estimate of $1.45 billion. The revenues grew ~6.0% YoY (year-over-year) due to the accelerated adoption of the EPYC processor and GPU datacenter graphics product.

While Advanced Micro Devices registered 9% revenue growth in the Computing and Graphics segment due to strong sales of Ryzen chips, the Enterprise, Embedded, and Semi-Custom segment’s revenues were flat YoY due to lower semi-custom sales.

The adjusted gross margin expanded by seven percentage points to 41% from 34% a year ago due to Ryzen and EPYC processor sales.

Guidance

Advanced Micro Devices expects the first-quarter revenues to be $1.20 billion–$1.30 billion—compared to analysts’ expectations of $1.275 billion. For 2019, Advanced Micro Devices expects high-single-digit percentage revenue growth. Analysts expect the company’s 2019 revenues to be $6.841 billion, which is 5.6% higher than the 2018 revenues.

The softer-than-expected revenues in the fourth quarter came after NVIDIA (NVDA) slashed its revenue guidance for the fourth quarter on January 28. NVIDIA blamed trade concerns and the slowdown in China (MCHI) (FXI) for the cut in its revenue guidance. NVIDIA also blamed the diminishing demand for its cryptocurrency. NVIDIA is expected to report its fourth-quarter earnings results on February 14 after the market close.

Like NVIDIA, Apple and Intel (INTC) have also suffered from the slowdown in China. Intel posted soft results in the fourth quarter and gave weak guidance for 2019 due to sluggish demand in China.