By Chavi Mehta and Jane Lanhee Lee
(Reuters) -Advanced Micro Devices forecast second-quarter revenue below estimates on Tuesday, showing the chip firms will continue to face challenges as PC sales and the data center market remain weak.
The stock dropped over 4% in after-hours trading. Executives at AMD rival Intel Corp last week told investors they expected the PC market to start rebounding in the second half, raising Intel’s margins with it. Those remarks had spurred hopes that AMD’s PC business might also show signs of recovery, but the company’s results showed demand remains down.
“AMD results were more vulnerable than Intel’s because most AMD-based PC customers were consumers. In contrast, Intel had a significant share in the business PC segment,” said Mikako Kitagawa, analyst at research firm Gartner. “The results reflect a weaker consumer PC segment than the business PC segment.”
Enterprise, cloud, and China server customers have been cutting orders, with AMD rival Intel expecting data center demand to decline throughout the first half and recover only moderately in the second half. The weakness is also pronounced amid US cloud customers, analysts said.
Order cuts by networking equipment makers have also cast a shadow over demand for products by Xilinx, the data center and networking chip company AMD acquired last year.
CEO Lisa Su remained positive in initial comments released with the earnings report.
‘Longer-term, we see significant growth opportunities as we successfully deliver our road-maps, execute our strategic data center and embedded priorities and accelerate adoption of our AI portfolio,’ she said.
AMD forecast current-quarter revenue of about $5.3 billion, plus or minus $300 million. Analysts polled by Refinitiv were expecting revenue of $5.48 billion.
Revenue in the quarter ended April 1 came in at $5.35 billion, compared to estimates of $5.30 billion.
Revenue from AMD’s client segment, which includes personal computers, fell 65% to $739 million in the first quarter.
Data center segment revenue was flat at $1.30 billion during the quarter.
(Reporting by Chavi Mehta in Bengaluru; Editing by Maju Samuel and David Gregorio)
