AMD Shares Plummet After Chip Maker Cuts Outlook

Key Points

• Shares of Advanced Micro Devices (AMD) fell over 5% on Wednesday following a disappointing earnings report.
• AMD cut its revenue guidance for the first quarter, citing weaker-than-expected demand for its products, including data center and gaming chips.
• Analysts note that AMD is facing increasing competition from rivals Intel and Nvidia, as well as macroeconomic headwinds.

Details

AMD shares opened at $83.88 on Wednesday, down from their closing price of $88.25 on Tuesday. The stock continued to decline throughout the morning, reaching a low of $82.30 before recovering slightly.

The sell-off came after AMD reported first-quarter revenue of $5.6 billion, below the consensus estimate of $5.8 billion. The company also lowered its revenue guidance for the second quarter, from $6.7 billion to $6.5 billion.

AMD CEO Lisa Su blamed the weaker-than-expected results on "declining demand in several end markets, including consumer PC, gaming, and enterprise." She said that the company is "taking actions to reduce costs and improve profitability."

Analyst Reaction

Analysts were largely negative on AMD's earnings report. Citigroup analyst Atif Malik downgraded the stock from "buy" to "neutral," with a price target of $85. He said that AMD's "guidance implies a material slowdown in growth."

Berenberg analyst Nicolas Gaudois also downgraded AMD, from "hold" to "sell." He said that AMD is "facing a number of challenges, including increased competition, macroeconomic headwinds, and a lack of clear catalysts for growth."