When Advanced Micro Devices Inc. reports earnings on Tuesday afternoon, the important number probably won’t be in the report.
It’s more likely that investors will pay close attention to a statement that AMD’s management usually makes on its earnings call. That’s how much the company thinks its MI300 AI program will bring in over the course of the whole year.
Cantor Fitzgerald’s C.J. Muse wrote over the weekend, “If AMD is unable to raise the guide, we see further downside risk for shares.” He pointed out that the company had previously predicted that the metric would bring in more than $4 billion in sales. “On the other hand, a rise to $5 billion or more would be great for shares.”
Muse saw AMD shares drop by more than 20% in the last two weeks. Because of the drop, it’s “clear shares have de-risked to a great degree,” he wrote. But he thinks Wall Street will be listening for comments on Microsoft Corp. MSFT 0.43%’s possible MI300 order cuts, which have been rumored.
“If this turns out to be true and demand destruction is really hurting the ramp, there is a big chance that the $5.5 billion we predicted for 2024 AI accelerator sales will not happen,” he wrote. “If these rumors aren’t true, then the $5–6 billion in MI300 [revenues for calendar year 2024] would probably stay on track based on what we’ve heard from the supply side.”
Chris Rolland of Susquehanna also wrote about rumors of order cuts after competitor Nvidia Corp.’s NVDA 1.62% GTC event earlier this year. With this in mind, “the buy side has been looking more closely at the assumption of further upside to the 2024 guidance,” he wrote.
It’s not with great confidence that Rolland said, “We reluctantly expect an additional $500 million raise, on the way to $5 billion for 2024.”
Analysts don’t agree on what kind of MI300 guidance would be good enough for Wall Street. For example, Matt Bryson of Wedbush wrote that some data points he looked at in early June pointed to the possibility of $6 billion in MI300 shipments this year, but that prospect may have been harmed since then, and $6 billion seems to be on the high end of what is expected right now.
According to Bryson, AMD’s guidance of $4 billion might be disappointing, but a raise to $4.5 billion might be enough to make the stock go up because AMD could meet or beat the midpoint of current expectations if revenue trends keep going up (especially since other markets are doing well).
On the other hand, he said that he doesn’t know “how AMD might react to numbers.”
The analysts that FactSet tracks think that AMD will report 68 cents in adjusted earnings per share, which is more than the 58 cents they reported in the same quarter last year. Most people also think that the overall revenue will go up from $5.36 billion last year to $5.72 billion this year.
The income from the data center will go up from $1.32 billion to $2.77 billion, and the income from clients will go up from $998 million to $1.44 billion. The client sector keeps an eye on AMD’s PC business.
The money made from gambling is expected to drop from $1.58 billion to $655 million. It is predicted that embedded sales will drop from $1.46 billion to $850 million.
An expert at Raymond James called it “PC looks stable,” the server market was beginning to recover, and gaming should get better in the second half after a rough start. “On the other hand, recent comments from Auto/Industrial [IC] suppliers suggest that embedded [Xilinx] recovery will probably happen more slowly.”
