AMD Stock Dips Following Underwhelming Sales Outlook—Critical Price Points to Monitor
AMD shares dropped significantly after the chipmaker's sales forecast fell short of Wall Street expectations. Stay updated on crucial price levels to watch.
Key Insights
- AMD's shares declined sharply as the company provided a weaker-than-anticipated sales forecast for its PC chips and CPUs, disappointing investors.
- Despite this, AMD exceeded analyst revenue predictions for the fourth quarter, fueled by strong growth in its data center and client segments.
- An earnings-related pullback might find support near a three-month trendline, currently around $160.
Advanced Micro Devices, Inc.
Advanced Micro Devices (AMD) experienced a notable pre-market decline on Wednesday after issuing a first-quarter sales forecast that fell short of analyst expectations, reflecting softening demand for its PC chips and central processing units (CPUs). Despite surpassing fourth-quarter revenue estimates, the Santa Clara-based company projected first-quarter sales of approximately $5.4 billion, plus or minus $300 million, below Wall Street’s anticipated $5.73 billion.
AMD anticipates a decline in its PC chip sales compared to the previous quarter, with flat revenue expected from its data center segment. Growth in graphics processing unit (GPU) sales is projected to offset slowing CPU demand. The company raised its 2024 AI GPU chip sales forecast significantly to $3.5 billion, up from an earlier estimate of $2 billion. CEO Lisa Su highlighted ongoing collaborations with major cloud providers like Microsoft, Oracle, and Meta to deploy Instinct GPUs supporting both internal AI workloads and external services.
For the fourth quarter, AMD reported revenue of $6.17 billion, slightly above the $6.12 billion consensus forecast, driven by impressive year-over-year growth of 38% and 62% in its data center and client segments respectively, fueled by demand for AI-focused Instinct GPUs and recent chip launches.
After briefly dipping below the 200-day moving average in late October, AMD shares have steadily climbed, with increased trading volume leading up to the earnings announcement. Should the stock experience an earnings-driven pullback, investors should watch the three-month trendline near $160 for potential support. Falling below this level could signal the beginning of a trend reversal.
Approximately two hours before Wednesday’s market open, AMD shares were down 4.7% at $164.00.
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At the time of writing, the author holds no positions in the securities mentioned above.
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