Semiconductor company Advanced Micro Devices (AMD) stock saw its stock price tumble over 10% in pre-market trading Wednesday despite topping Q4 revenue estimates. The selloff came after AMD issued disappointing first quarter guidance pointing to slowing demand for its PC and data center chips.
AMD said it expects Q1 revenue of approximately $5.4 billion, plus or minus $300 million. This outlook fell short of Wall Street expectations for $5.73 billion, according to Refinitiv.
The company predicts its computing and graphics segment, which includes PC chips and GPUs, will decline sequentially in Q1 after strong holiday sales. AMD also forecasts its data center revenue will remain flat versus Q4 as customers absorb existing inventory.
“We expect PC market weakness in the first half of the year to impact growth,” said AMD CEO Lisa Su on the company’s earnings call. She attributed the slowdown to macroeconomic uncertainty and channel inventory corrections.
In Q4 results, AMD revenue grew 16% annually to $6.17 billion, narrowly beating analyst estimates of $6.12 billion. Revenue growth was powered by a 38% surge in data center sales and a 62% spike in client segment revenue driven by demand for Ryzen and EPYC chips.
AMD’s Q4 earnings per share of $1.12 also exceeded expectations. For full-year 2023, revenue grew 43% to $22.7 billion.
While the Q4 beat was overshadowed by disappointing guidance, AMD sees its AI GPU chip revenue reaching $3.5 billion in 2024, up from a prior $2 billion forecast. AMD is supplying AI accelerators to major cloud players like Microsoft, Oracle, and Meta Platforms.
After rallying over 40% from late October lows into earnings, AMD stock remains in an uptrend despite the post-earnings drop. If the pullback continues, key support exists around the $160 level and 200-day moving average. Violating this area could signal a trend reversal.
AMD’s cautious outlook reflects inventory work-downs and slowing PC market growth, concerns mirrored by rivals like Nvidia. But with strong AI momentum and data center traction, AMD remains well-positioned to capitalize on key tech trends despite near-term headwinds.