AMD Earnings Preview: Can Chipmaker Bounce Back in Q3 2024?
Advanced Micro Devices (AMD) is gearing up to unveil its third-quarter 2024 financial results on Tuesday, October 29th, after the market closes. This report holds significant weight for the company, which has lagged behind its industry peers in recent months, particularly the tech titan, Nvidia. The question on everyone’s mind: will AMD’s Q3 earnings signal a turning point, paving the way for a resurgence, or will the performance gap with competitors continue to widen?
Wall Street’s Outlook: Robust Growth Expected
Despite facing headwinds, Wall Street analysts are optimistic about AMD’s Q3 performance. They project adjusted earnings per share (EPS) of 92 cents, representing a substantial 31% increase from the same period last year. Revenue is expected to reach $6.71 billion, a 16% year-over-year rise. These projections suggest continued growth for AMD, even amid industry-wide challenges.
A History of Earnings Beats, But Mixed Stock Reactions
AMD has a strong track record of exceeding EPS expectations, beating estimates in seven out of the last eight quarters. Revenue has also largely surpassed forecasts, with the most significant beat occurring in Q1 2024. However, the stock’s immediate reaction to these earnings releases has been volatile, showcasing a mixed investor sentiment.
For instance, strong earnings in Q3 2023 and Q4 2022 resulted in substantial stock gains. However, other quarters, including Q1 2024, witnessed sharp declines despite positive earnings beats, indicating potential concerns about future guidance and other factors.
Analyst Insights: Optimism and Cautious Notes
Analysts are offering varied perspectives on AMD’s prospects. Rosenblatt Securities analyst Hans Mosesmann remains optimistic, highlighting the strong performance of AMD’s EPYC server CPUs and MI300 AI GPUs, especially in the high-performance computing segment. However, he anticipates ‘slight growth’ in embedded segments and double-digit declines in gaming consoles, potentially impacting AMD’s overall performance. Despite these concerns, Rosenblatt maintains a bullish outlook with a 12-month price target of $250, representing a potential 60% upside.
Goldman Sachs analyst Toshiya Hari shares a long-term optimistic view, driven by AMD’s increasing market share in x86 server CPUs and the growing demand for AI infrastructure. He believes AMD’s upcoming server CPU generation could further solidify its position against Intel Corp. in terms of efficiency and total cost of ownership.
Investing in AMD: Direct and Indirect Exposure
Investors seeking direct exposure to AMD can purchase its stock. For those interested in indirect exposure, several ETFs heavily weighted in AMD shares offer an alternative. Some of the top ETFs include Simplify Volt RoboCar Disruption and Tech ETF (VCAR), AOT Growth and Innovation ETF (AOTG), and Strive U.S. Semiconductor ETF (SHOC).
Key Takeaways:
* AMD’s Q3 2024 earnings report is expected to reveal whether the company is regaining momentum or facing further challenges against its competitors.
* Wall Street analysts anticipate strong growth, with EPS expected to increase by 31% year-over-year.
* While AMD has a history of exceeding earnings expectations, investor reaction to these reports has been volatile, reflecting uncertainties.
* Analysts hold varying views on AMD’s future, with some emphasizing its strength in specific segments like server CPUs and AI infrastructure, while others point to potential headwinds in other areas.
