Advanced Micro Devices Inc (NASDAQ:AMD) is expected to post a nearly 19% fall in second quarter revenue on Tuesday, with investors looking for more cues regarding the rebound in PC market crucial for the chipmaker.
Lat week, rival Intel Corp (INTC) provided the much-needed optimism to investors when it posted surprise quarterly profit and a strong guidance for the first-quarter – signs that PC demand has started to see improvement.
The pandemic-induced boom for laptops and computers had faded in the last few quarters as higher prices prompted consumers to curb their spending on gadgets and other discretionary items.
However, according to data from IT research firm Gartner, worldwide PC shipments has started to show initial signs of stabilization during the second quarter after seven consecutive quarters of year-over-year decline.
AMD, which has grabbed a fair share of the lucrative data center market from Intel, has gained nearly 76% so far this year.
The latest trend of artificial intelligence is also expected to give a boost to AMD in the coming years.
Investment firm Northland analyst Gus Richard raised his rating on AMD shares to outperform from market perform on July 5, noting that the firm has been “wrong” about AMD shares and it is looking to change that, with the belief the stock will get an “AI multiple.”
Seeking Alpha analyst Mark Holder also believes the company’s upcoming MI300 chip, which will ship later this year, will be a strong competitor for Nvidia’s (NVDA) H100 chips.
Wall Street analysts expect AMD to post earnings per share (EPS) of $0.57, implying a fall of 45.7% while revenue is expected to be $5.32 billion.
Over the last 2 years, AMD has beaten both EPS and revenue estimates 88% of the time.
While Seeking Alpha analysts and Wall Street rated the stock a “buy”, Seeking Alpha’s Quant Ratings consider the stock a “hold”, dragged down by the valuation metrics.
Over the last 3 months, EPS estimates have been revised upward two times, compared to 28 downward revisions, while revenue estimates have seen three upward revisions versus 26 downward moves.
