AMD Chairman and CEO Lisa Su delivers AMD’s keynote address during the Consumer Electronics Show (CES) on January 4, 2023 in Las Vegas, Nevada.

Robin Beck | AFP | Getty Images

AMD on Tuesday reported fourth-quarter earnings that beat Wall Street’s expectations for sales and profit, but analysts expected a 10% year-over-year drop in sales for the current quarter. Shares rose more than 3% in extended trading. Here’s how the company fared against Refinitiv consensus estimates for the quarter ended in December:

  • Earnings per share: $0.69, adjusted, vs. $0.67 per share expected
  • Revenue: $5.6 billion vs. $5.5 billion expected

AMD said it expects sales of $5.3 billion in the current quarter, slightly below Refinitiv’s estimate of $5.47 billion. AMD’s estimate is for a 10% decline in sales in the current quarter. AMD’s sales rose 44% in the December quarter.

The company also said it expects adjusted gross margins to be around 50%, a key metric for chipmakers.

AMD reported earnings as many of its rival chipmakers have stumbled in recent weeks, citing lower consumer demand for finished electronics and a glut of parts needed to make PCs and servers. Intel, AMD’s main competitor, reported a disastrous quarter last week that included a weak forecast for 2023.

The chipmaker attributed its win to strong growth in its embedded and data center businesses and said revenue from customers or chips for PCs and laptops and its gaming segment fell.

AMD’s data center segment grew 42% year-over-year to $1.7 billion. The embedded devices segment grew by 1,868%, AMD reported, thanks to sales from the purchase of Xilinx.

Although AMD said sales of its PC chips and GPUs were sluggish, it said its data center segment grew 42% year-over-year, suggesting that it took market share from Intel.

But the customer group, which includes sales of PC processors, fell 51% from a year ago due to a slump in the PC market, AMD said. It added that its customers have too much inventory of its chips, a theme that has been mentioned by other semiconductor companies in recent weeks. According to estimates, the global PC market is in a prolonged slowdown.

AMD CEO Lisa Su said the PC environment was “weak.”

“Although the demand environment is mixed, we are confident in our ability to capture market share in 2023 and deliver long-term growth based on our differentiated product portfolio,” Su said in a statement.

AMD’s gaming business, which consists of graphics cards and game console chips, fell 7% year-over-year. The decline was driven by graphics cards and was offset by revenue from “semi-custom” sales, which the company says is sales of chips for gaming systems such as the PlayStation 5.

AMD expects the PC chip and GPU segments to continue to decline in the current quarter, but data center and embedded embedded system sales will grow.

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